Indonesia's Payment Balance Improves, Rupiah Movement Is Expected To Strengthen

Illustration (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate on Wednesday, November 22, 2023 is expected to strengthen again slightly, supported by the performance of the Indonesia Payment Balance (NPI) in the third quarter of 2023 improving amid increasing uncertainty in the global economy.

Quoting Bloomberg, the Rupiah exchange rate on Tuesday, November 21, the rupiah spot exchange rate slightly strengthened 0.03 percent to Rp15,440 per US dollar. Meanwhile, Jisdor's rupiah exchange rate fell 0.11 percent daily to a price level of Rp15,436 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi conveyed the improving sentiment of risk and expectations that the Federal Reserve would stop rising interest rates.

This comes as US bond yields have fallen to their lowest level in two months, indicating a potential shift in the direction of monetary policy.

"The release of the minutes of the Federal Open Market Committee (FOMC) before Thanksgiving is expected to provide further clues regarding the central bank's approach following a recent report showing a decrease in inflationary pressure," he explained in his official statement Wednesday, November 22.

The performance of the Indonesia Payment Balance (NPI) in the third quarter of 2023 improved amid increasing uncertainty in the global economy.

NPI in the third quarter of 2023 showed significant improvement by recording a deficit of 1.5 billion US dollars, lower than the deficit in the previous quarter of 7.4 billion US dollars.

This condition is supported by an improving current account balance deficit and capital and financial transactions.

Meanwhile, foreign exchange at the end of September was recorded to remain high at 134.9 billion US dollars, or equivalent to financing 6 months of imports and paying government foreign debt, and was above the international adequacy standard of around 3 months of imports.

The current balance of transactions has improved, supported by improvements in the trade balance of goods and services that remain solid. In the third quarter of 2023, current transactions recorded a deficit of 0.9 billion US dollars or equivalent to 0.2 percent of GDP, much down compared to the US$ 2.2 billion deficit. US dollars or equivalent to 0.6 percent of GDP in the previous quarter.

The increasing non-oil and gas trade balance surplus is supported by improvements in demand for several export commodities, especially iron and steel, amid the trend in commodity prices that are still falling.

Meanwhile, the oil and gas trade balance deficit is increasing in line with the increase in world oil prices.

Bank Indonesia assesses that the good performance of NPI in the third quarter of 2023 is able to continue to support Indonesia's external resilience. In the future, Bank Indonesia will always pay close attention to the dynamics of the global economy that can influence the prospects for NPI and continue to strengthen the response to policies that are supported by close policy synergies with the Government and relevant authorities to strengthen the resilience of the external sector.

Ibrahim estimates that the rupiah will fluctuate but close higher on Wednesday, November 22 trading in the price range of IDR 15,410- IDR 15,490 per US dollar.