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Bisnis.comJAKARTA — Rupiah exchange rate has the potential to strengthen against the United States (US) dollar in trading early next week, Monday (22/1/2024), due to the potential for the Fed to cut interest rates in the future.
On Friday (19/1/2024) the rupiah closed up 0.05% or 8.5 points to a level of IDR 15,615 per US dollar. On the other hand, the US dollar index was observed to weaken 0.15% to Rp. 103.38.
Financial Market Observer Ariston Tjendra said there are several catalysts that could encourage the rupiah to strengthen next week, namely a series of releases US economic data.
“The Rupiah has the opportunity to strengthen and trade below IDR 15,600 against the US dollar this week,” said Ariston to Business Saturday (20/1/2024).
According to him, the strengthening of the rupiah might occur if the US economic data released Thursday (25/1/2024), namely US gross domestic product (GDP) data for the fourth quarter of 2023, is below the estimate of 1.8%.
As previously, US GDP increased 4.9% in the third quarter of 2023 compared to the same period the previous year (year-on-year/yoy).
Apart from the release of US GDP data for the fourth quarter of 2023, investors’ attention next week will also be focused on the release of the US personal shopping price index (PCE), on Friday (26/1/2024).
According to him, the weakening US economy will confirm cuts interest rate US benchmark by the Fed this year, which could encourage the weakening of the US dollar.
As for The Fed still holding interest rates or the Fed Funds Rate (FFR) in the range of 5.25%-5.5% at the FOMC in December 2023. The Fed is projected to cut interest rates at least three times this year.
Apart from that, Ariston said market players are also still wary of the increasingly heated tension situation in the Middle East which could trigger another shift to safe assets (safe haven) like gold and encourage the strengthening of the US dollar.
“Another issue that could give negative sentiment to the rupiah is the issue of the global economic slowdown. High inflation conditions, geopolitical conflicts that disrupt supply, etc. are market concerns that will slow down the economy,” he concluded.
As a result, with this series of sentiments, Ariston projects the movement of the rupiah exchange rate against the US dollar in the range of IDR 15,500 to IDR 15,650 this week.
Separately, Forexindo Berjangka Profit Director Ibrahim Assuaibi said strong retail sales data and a series of hawkish comments from Fed officials this week fueled increasing doubts that the Fed would start lowering interest rates in March 2024.
He said the US Department of Labor reported initial claims for state unemployment benefits fell by 16,000 to a seasonally adjusted 187,000 for the week ending January 13, 2024, and was the lowest level since September 2022.
“Market players are seen reducing bets on the Fed cutting interest rates with a 51.9% chance of cutting interest rates in March 2024, down sharply from the 68.3% seen last week,” Ibrahim said in research Friday, (19 /1/2024).
From domestic sentiment, government debt until December 31 2023 closed at IDR 8,144.69 trillion. This amount increased by IDR 103.68 trillion compared to the previous month which was IDR 8,041.01 trillion.
The increase in debt brings the government debt ratio at the end of 2023 to 38.59% of gross domestic product (GDP), up from the previous month’s level of 38.11% but down compared to the end of 2021 and 2022.
In detail, the amount of government debt in the form of SBN is IDR 7,180.71 trillion. Consisting of domestic SBN amounting to IDR 5,808.13 trillion, originating from Government Debt Securities (SUN) IDR 4,700.60 trillion and State Sharia Securities (SBSN) amounting to IDR 1,107.53 trillion.
“For trading next Monday, the rupiah currency is predicted to fluctuate but will close slightly higher in the range of IDR 15,590 – IDR 15,650,” explained Ibrahim.
Check out the movement of the rupiah exchange rate against the US dollar today live.
12:02 WIB
Rupiah is under pressure
The Rupiah fell 13.5 points or 0.09% to IDR 15,628.5 per US dollar as of 12.00 WIB.
The US dollar index corrected 0.10% to 103.185.
10:28 WIB
Rupiah weakens
The Rupiah weakened 10 points or 0.06% to IDR 15,625 per US dollar as of 10.25 WIB.
The US dollar index fell 0.13% to 103.156.
09:05 WIB
The rupiah is stagnant, the US dollar is sluggish
The rupiah opened stagnant at IDR 15,615 per US dollar.
The US dollar index weakened 0.13% to 103.152.
2024-01-22 05:11:19
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