mae, CNBC Indonesia
Market
Wednesday, 13/09/2023 09:07 WIB
Photo: Officers count money at the Luxury Valuta Perkasa money exchange, Blok M, Jakarta, Thursday, 21/7. The Rupiah was under pressure in trading Thursday (21/7/2022) (CNBC Indonesia/Muhammad Sabki)
Jakarta, CNBC Indonesia – The rupiah exchange rate weakened against the United States (US) dollar ahead of today’s US inflation announcement. Refer Refinitiv, the rupiah was in the position of IDR 15,355/US$1 at the start of trading today, Wednesday (13/9/2023). Garuda’s currency weakened 0.13%.
This weakening extends the negative trend of the rupiah which has never strengthened throughout September.
Today’s movement of the rupiah will be overshadowed by US inflation data which will be released today or Wednesday evening Indonesian time.
According to a data collection platform, US general inflation is expected to jump to 3.6% on an annual basis (year-on-year/yoy) from the previous month of 3.2% yoy. Meanwhile, core inflation is expected to decline to 4.3% yoy compared to the previous month’s 4.7% yoy.
If US inflation is worse than market expectations, the market’s hopes of seeing the US central bank, The Federal Reserve (The Fed) soften, will be destroyed.
Expectations still hawkishthe Fed will trigger capital outflow so that the rupiah could be depressed. This expectation can at least be seen from the movement of the US dollar index.
The dollar index strengthened sharply to 104.71 in yesterday’s trading, the highest in the last three days. The strengthening of the index shows how strong the Greenback currency is against other currencies.
The CME Fedwatch tool shows 93% of investors believe the Fed will hold its benchmark interest rate at 5.25%-5.5% at its September meeting. As many as 7% predicted an increase in interest rates of 25 bps.
However, the big question for the market is what policy the Fed will take after September and when the Fed will signal easing. If the signal for easing goes further, the rupiah could come under further pressure.
For the record, the Fed will hold a meeting on September 19-20 to determine interest rates.
Watch the video below:
US Inflation Makes You Nervous, JCI Slips into the Red Zone
(is/is)
2023-09-13 02:07:00
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