U.S. Unemployment Rate Drops, Rupiah Expected to Weaken Today

TEMPO.CO, Jakarta - The Director of PT Laba Forexindo Berjangka, Ibrahim Assuaibi, predicted the rupiah would fluctuate today, Tuesday, September 10, 2024, but continues the downward trend against the U.S. dollar.

"The rupiah fluctuated but closed lower in the range of Rp15,440-15,520 per U.S. dollar," he said in an official statement quoted on Tuesday.

The rupiah exchange rate at the end of yesterday's trading fell against the U.S. dollar, influenced by the drop in the U.S. unemployment rate in August 2024. The rupiah closed down 78.5 points to Rp15,456 per U.S. dollar.

Ibrahim explained that the dollar index strengthened due to several factors, including the Friday drop of the U.S. unemployment rate from 4.3 percent to 4.2 percent. 

In addition, wages grew 0.7 percent month-on-month (m-o-m) from the estimated increase of 0.3 percent and grew 3.8 percent year-on-year (y-o-y) from the estimated increase of 3.7 percent. 

According to Ibrahim, this led to expectations of a cut in interest rates by the US central bank or the Federal Reserve (The Fed) by 25 basis points. "So, the U.S. dollar rebounded and pressure on the rupiah again at the beginning of trading this week," said Ibrahim.

Investors are still awaiting the Fed’s decision to carry out monetary relaxation. The Fed is expected to cut the interest rate in September. 

Senior Investment Information Mirae Asset Sekuritas, Nafan Aji Gusta, said Bank Indonesia would likely follow if that happens. "BI will also implement a forward-looking policy to lower interest rates, predicted in October," he told Tempo.

Central banks of other countries will follow the relaxation as the era of long-term interest rate cuts begins. He projects that the Fed will make gradual cuts until 2026.

ILONA ESTHERINA 

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