JAKARTA – The rupiah exchange rate during trading on Wednesday, July 3, 2024 is expected to weaken against the US dollar.
Citing Bloomberg, the rupiah exchange rate on Tuesday, July 2, 2024, the rupiah rate in the space market closed down 0.46% at the level of IDR 16,396 per US dollar. Meanwhile, the Jakarta Interbank spot dollar (Jisdor) Bank Indonesia (BI) rupiah exchange rate closed down 0.17% at the price level of IDR 16,384 per US dollar.
PT Laba FXindo Berangka director Ibrahim Assuaibi said the dollar index was stable against other currencies after recovering from a recent decline on Monday, with more signals regarding Fed and US interest rates to be released this week.
“Key nonfarm payrolls data for June will be released on Friday and should provide more insight into the labor market, which is also a major consideration for the Fed in cutting interest rates,” he said in his statement, quoted Wednesday, July 3.
According to Ibrahim, the US dollar weakened last week as traders increased their bets on a 25 basis point interest rate cut in September.
However, some Fed officials have said central banks need more confidence that inflation is under control before cutting interest rates.
On the domestic side, Ibrahim pointed to the impact of the decline in the Indonesian manufacturing purchasing manager’s index (PMI) which fell to the level of 50.7 in June 2024, from the previous month’s figure of 52.1.
Despite the slowdown in expansion, Ibrahim said the domestic manufacturing industry still showed expansive conditions that can be sustained for 34 consecutive months until June 2024.
The government appreciates the efforts of industrial players who continue to maintain optimism and productivity in global economic conditions full of uncertainty. Even the industrial sector is currently in alarming conditions. Industry players have reduced their optimism about the future development of business.
According to the S&P Global report, domestic manufacturing lost momentum in June 2024 due to slowdown in production, new demand and sales, so Indonesia’s manufacturing PMI level declined sharply last month.
The condition affects the industry’s confidence in production conditions for the next 12 months, which are not exceeded by the lowest positions in 4 years in May, as well as one of the lowest in the record. This is influenced by a decline in orders from abroad affected by market conditions, trade restrictions, as well as less favorable regulations.
The regulation in question is the Minister of Commerce Regulation No. 8/2024 on Import Policies and Regulations which facilitates the importation of goods from abroad that are similar to domestically produced products.
Ibrahim said the import relaxation rules of the regulation have led to a decline in optimism among industry players, which has an impact on the reduction in PMI.
Ibrahim predicts the rupee to move volatile but close lower during trading on Wednesday, July 3, 2024 in the price range of IDR 16,380 to IDR 16,470 per US dollar.
Tag: economy rupiah exchange rate rupiah
