It is predicted that the Rupiah could still weaken to Rp. 15,900 per US dollar

Director of Laba Forexindo Berjangka, Ibrahim Assuaibi, in his analysis report estimated that the rupiah will still fluctuate in a weakening trend next week or early April 2024. "For Monday's (1/4/2024) trading, the rupiah currency will fluctuate, but it closed weaker in the range of Rp 15,840 - Rp 15,910," he said in the report quoted on Friday (29/3/2024).

The Rupiah was at the level of Rp 15,856 in trading at the end of this week which ended yesterday (Thursday, March 28, 2024), before the long weekend and Friday market holiday, it closed stronger by one point despite previously weakening by 20 points.

Also read: Fate of Rupiah Uncertain at the Beginning of the Year

The slight strengthening is not unrelated to external sentiment regarding the US interest rate reduction policy by their central bank, The Fed, which will still consider the economic situation in the country.

The Rupiah will still fluctuate in the weakening space next week or early April 2024.

Today, the US will release data on the PCE inflation index or the average rise in domestic consumption prices. Separate speeches from Federal Reserve Chairman Jerome Powell and Federal Open Market Committee (FOMC) member Mary Daly will also be delivered on the same day.

"Any signals from either of them regarding a rate cut will be closely watched after other Fed officials struck a somewhat hawkish tone this week," he said.

Senior economist at Mirae Asset Sekuritas, Rully Wisnubroto, explained in his presentation at an event with the media on Wednesday (27/3/2024) that despite the consensus on the reduction of interest rates in the US in July, the frequency of the reduction is expected to not meet expectations, with only three times predicted instead of the initial estimate of 6-7 times this year.

Also read: BI Consistently Holds Interest Rates at 6 Percent

This situation is believed to also make it difficult for Indonesia through Bank Indonesia (BI) to lower interest rates in the near future. He predicted that BI will only lower its benchmark interest rate which is currently at 6 percent level, in tandem with or after The Fed lowers its interest rate.

"This is what causes the rupiah to tend to weaken and (bond) yields to increase (due to high interest rates)," he said.

According to him, the weakening of the rupiah is also caused by the difficult economic situation faced by Indonesia. Although economic growth is quite good at 5 percent, there has been a slowdown in growth components such as household consumption, government spending, and investment. On the other hand, this growth is supported by a positive balance of payments, including a surplus in export values.

The central bank (BI) is still stabilizing through interventions in the spot and bond markets. The institution is also considered capable of maintaining foreign exchange reserves of 144 billion US dollars at the end of February 2024.

In this situation, Rully understood that Bank Indonesia (BI) is still stabilizing through interventions in the spot and bond markets. The institution is also considered capable of maintaining foreign reserves of 144 billion US dollars by the end of February 2024. This value is equivalent to financing 6.5 months of imports or 6.3 months of imports and payments of the government's foreign debts, and is above the international sufficiency standard of around three months of imports.

"Recently, I believe that the exchange rate of around Rp 15,700 to Rp 15,800 per US dollar has been the result of intervention. In my opinion, if not intervened, it could have dropped even further." he said.

Also read: Rupiah Depreciation Begins to Hit Manufacturing