Rupiah Projected to Strengthen Slightly as Investors Wait for US Economic Data

JAKARTA - The rupiah exchange rate on Wednesday 15 November 2023 is expected to strengthen slightly again amid market focus on inflation data from the main consumer price index (US CPI).

Quoting Bloomberg, on the Rupiah exchange rate on Tuesday, November 14, the spot rupiah exchange rate strengthened slightly by 0.04 percent to IDR 15,694 per US dollar. Meanwhile, the Jisdor rupiah exchange rate rose 0.08 percent daily to a price level of IDR 15,699 per US dollar.

Ibrahim Assuaibi, Director of PT.Laba Forexindo Berjangka, said that the market focus was on the main consumer price index (CPI US) inflation data released today. The figure is expected to show a decline in inflation through October, after inflation rose above expectations over the past two months.

"The figures also come shortly after a series of Federal Reserve officials warned that high inflation could give banks more incentive to raise interest rates further. Higher interest rates for longer periods of time are expected to weaken risk assets," He said in his statement, Wednesday 15 November.

Additionally, concerns over China also weighed on regional sentiment, as data showed a further slowdown in lending activity in the country through October, data showed on Monday.

The figures show that liquidity levels in the country are declining despite recent stimulus measures from the government.

Ibrahim said that taking into account the latest global and domestic economic conditions, Bank Indonesia (BI) sees the opportunity for a number of macroeconomic indicators to weaken in 2024.

Meanwhile, Indonesia's economic growth next year is estimated to be around 5 percent yoy. This is slower compared to the prognosis for Indonesia's economic growth in 2023 in ATBI 2023 which is 5.01 percent yoy.

However, he is optimistic that there are a number of things that can boost the strength of economic growth next year. Mainly due to the increase in salaries for state civil servants (ASN), holding general elections (Pemilu), and development of the Indonesian Capital City (IKN).

Then the inflation rate in 2024 is estimated at 3.20 percent yoy. This is also higher when compared to the inflation prognosis in ATBI 2023 which is 2.84 percent. The increase in inflation next year is in line with continued good demand and the impact of a weaker exchange rate.

There are 6 factors from global conditions that can have implications for the domestic economy. Thus, macroeconomic assumptions are adjusted. First, global economic growth is weakening or slower growth.

Second, global inflation is still high even though monetary tightening has been implemented. This of course has an impact on global economic conditions. Third, namely, high reference interest rates for longer. Fifth, the strengthening of the dollar and finally the return of capital flows to developed countries or cash is the king.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Wednesday, November 15 in the price range of IDR 15,650- IDR 15,750 per US dollar.