Geopolitical Tensions Rise, Rupiah Potentially Weakens

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Thursday, December 12, 2024 is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, the Rupiah exchange rate on Wednesday, December 11, 2024, the rupiah exchange rate on the spot market closed lower by 0.30 percent at the level of Rp. 15,919 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.20 percent to a price level of Rp. 15,905 per US dollar.

Director of PT. Laba Forexindo Berjangka Ibrahim Assuaibi said China-Taiwan and Syria tensions were heating up again amid rising geopolitical tensions in the Middle East, after rebels toppled the Syrian government.

"The market is waiting to see what will happen in the region, considering that it has the potential to loosen Iran's grip in the Middle East," he said in his statement, quoted Thursday, December 12.

In addition, Ibrahim said Investors were cautious ahead of the US consumer price index data, which will be released today, which is likely to be a factor in the Federal Reserve's plans for interest rates.

Ibrahim expressed uncertainty over the long-term outlook for interest rates boosting the dollar's strengthening, which has put pressure on Asian currencies in recent weeks.

Meanwhile, from within the country, Indonesia's consumer confidence in the economy strengthened in November 2024, driven by improving economic expectations, according to a survey released by Bank Indonesia.

The consumer confidence index increased to 125.9 in November, up from 121.1 in the previous month. This increase was supported by higher numbers in the current index of economic conditions and the consumer expectation index, which rose to 113.5 and 138.3, respectively, from 109.9 and 132.4 in October.

According to the survey, consumer expectations of economic conditions over the next six months are also projected to improve. This increase is driven by the strengthening of expectations on all components, including income, job availability, and business activities, which rose from 138.4, 129.5, and 129.2 to 141.7, 136.8, and 136,2.

Geographically, a number of cities recorded a significant increase in the consumer expectation index. The city of Padang recorded the largest increase of 25.2 points, followed by Palembang and Ambon, which increased by 12.3 points each.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Thursday, December 12, 2024, in the price range of IDR 15,910 - IDR 15,970 per US dollar.