The Rupiah Closed Stronger This Afternoon to IDR 15,892 per USD

JAKARTA – Exchange rate (exchange rate) rupiah this afternoon closed up 27 points to IDR 15,892 after previously falling to IDR 15,920. Quoting Bloomberg data, today the rupiah opened at IDR 15,939 per US dollar. Money market observer Ibrahim Assuaibi said the US dollar index weakened because Federal Reserve Chairman Jerome Powell previously gave mixed signals regarding reducing US interest rates.

“Even though Powell said the Fed would eventually cut interest rates at the end of this year, he gave little guidance regarding the timing and scale of the potential cut,” Ibrahim wrote in his research, Thursday (4/42024).

Powell also said the central bank would need more confidence that inflation is moving toward its annual target of 2%. Powell’s comments come just before key nonfarm payrolls data for March, which will be released on Friday. But the main event this week will be nonfarm payrolls data for March, which will be released on Friday.

Stagnant inflation and a strong labor market are the Fed’s two biggest considerations in potentially lowering interest rates. Before the jobs data, focus will also be on speeches by other members of the Fed’s interest rate-setting committee. FOMC members Michelle Bowman and Thomas Barkin will speak at separate events later on Thursday.

Additionally, a number of top Japanese officials have warned markets against speculation on the yen, and that they would not rule out any action to lower the USDJPY pair. Violations of 152 have attracted high-level intervention by the Japanese government in 2022.

From domestic sentiment, Indonesia’s foreign exchange reserve position in March 2024 is expected to shrink further. This continues the decline in foreign exchange reserves in February 2024. Foreign exchange reserves in March 2024 are estimated at USD 143 billion. This position is down from foreign exchange reserves in February 2024 which reached USD144 billion.

This is due to the continued slowdown in exports of Indonesia’s main commodities, payment of government foreign debt and in line with the weakening of the rupiah exchange rate which is approaching IDR 16,000 per US dollar. This is because foreign exchange reserves are usually used for market intervention to maintain dollar supply and prevent rupiah depreciation.

He estimates that the rupiah exchange rate will be in a weakening trend in line with strong external pressures which are expected to persist until the end of the first semester of 2024. “Meanwhile, for the second semester of 2024, the development of the rupiah exchange rate is expected to be better, with expectations of a reduction in the Fed’s interest rate. “This will also be followed by a decline in demand for US dollars,” said Ibrahim.

So, the position of foreign exchange reserves will be better at the end of the year, or reach USD155 billion. This estimate is better compared to Indonesia’s foreign exchange reserve position at the end of December 2023 which was recorded at USD 146.4 billion.
Thus, for tomorrow’s trading, the rupiah currency is likely to open fluctuating and then close lower in the range of IDR 15,880 – IDR 15,930.

(nng)