Rupiah May Strengthen to 14,500 per US dollar, Analyst Says

TEMPO.CO, Jakarta - The rupiah's exchange rate is expected to fluctuate against the US dollar throughout this year this year. PT Laba Forexindo Berjangka director and analyst Ibrahim Assuaibi said there is a possibility for the rupiah to gain to Rp14,500 per dollar.

"The exchange rate may hit a weak level of Rp15,800 per US dollar. As for the gain, it may reach Rp14,500 per dollar," Ibrahim told Tempo on December 31. 

According to Ibrahim, there are at least three factors that may help the rupiah to gain some power against the greenback. The first is the possibility that the Federal Reserve will lower interest rates. If this happens, the European Central Bank may follow suit. "This could put the dollar index back to around 98, the lowest level before Covid-19," he said.

The second is a domestic factor, related to Indonesia's trade balance which is claimed to still be quite good, which will keep commodity prices in an uptrend. "The government will use this to boost commodity exports, including CPO, nickel, tin, bauxite and others," Ibrahim said.

The third factor is the presidential elections in Indonesia. If it goes for two rounds, Ibrahim said, the circulation of money will be quite massive and affect people's consumption, and eventually affect the gross domestic product (GDP). "A pretty good GDP may also be supported by Indonesia's manufacturing data, which will likely remain above 50," he projected.

Ibrahim also mentioned that Indonesia still has quite a good amount of foreign exchange reserves.

Negative sentiments will stem from the ongoing wars in Europe and the Middle East, which can cause economic slowdown and lead to high inflation. "There is also the possibility that the Fed Rate will not be raised. This is something that the market is afraid of," said Ibrahim.

Based on said factors, he estimates the rupiah to trade between 14,500 and 15,800 per US dollar throughout 2024.

TEMPO.CO

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