US Inflation Data Mereda, Rupiah Projected To Strengthen Slightly

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate on Thursday, November 16, 2023 is expected to strengthen slightly again due to data on the inflation of the main consumer price index (CPI AS) according to market expectations.

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, November 15, the rupiah spot exchange rate slightly strengthened 1.02 percent to Rp15,534 per US dollar. Meanwhile, Jisdor's rupiah exchange rate rose 1.25 percent daily to a price level of Rp15,503 per US dollar.

Director of PT Laba Forexindo Berjangka, Ibrahim Assuaibi said, US consumer price index inflation (CPI) data grew lower than expected in October, pushing for speculation that the Fed would have a slight push to raise interest rates further.

"The stagnant inflation has been a major challenge for the Fed in maintaining its hawkish stance, especially after inflation increased more than expected in August and September. This figure is still above the Fed's 2 percent annual target in October," he said in his statement, Thursday, November 16.

Given that the Fed is signaling future interest rates will largely depend on inflation, October's reading reduces interest rate hike expectations.

However, US interest rates are likely to remain higher over a longer period of time.

In addition, China's economic activity in October increased as industrial output grew faster and retail sales growth exceeded expectations, an encouraging sign for the world's second-largest economy.

Coupled with a massive liquidity injection of 600 billion yuan or 83 billion US dollars by Bank Rakyat China also increased sentiment, amid signs of the largest economic resilience in Asia

Ibrahim said that Indonesia's Trade Balance for the October 2023 period was in accordance with market expectations by experiencing a surplus of 3.48 billion US dollars.

This surplus is higher than September 2023 which reached 3.42 billion US dollars.

This surplus was supported by higher exports worth US$22.15 billion, while imports were US$18.67 billion.

With the trade balance again in surplus, Indonesia has recorded a surplus for 42 consecutive months.

The 42-month surplus in the era of President Joko Widodo (Jokowi) will match the achievements of President Susilo Bambang Yudhoyono (SBY).

The trade surplus has reached 42 months in the SBY era, from October 2004 to March 2008.

Previously, Indonesia's Foreign Debt (ULN) in the third quarter of 2023 fell compared to the previous quarter.

Indonesia's external debt position at the end of the third quarter of 2023 was recorded at USD 393.7 billion, down from the external debt position at the end of the quarter.

Ibrahim estimates that the rupiah will fluctuate but close higher on Thursday, November 16 trading in the price range of IDR 15,490- IDR 15,570 per US dollar.