The Rupiah strengthens ahead of the weekend, while the US Dollar is under pressure from US economic data

Alvin Karunia By Alvin Karunia
4 Min Read
Rupiah Menguat Jelang Akhir Pekan, Dolar AS Tertekan Data Ekonomi AS
Rupiah Menguat Jelang Akhir Pekan, Dolar AS Tertekan Data Ekonomi AS

jlk – The exchange rate of the Indonesian Rupiah against the US Dollar strengthened throughout this week.

In the spot market, the Rupiah closed at the level of Rp 15,624 per US Dollar on Friday (16/2), gaining 0.07% over the week.

Meanwhile, in the Jisdor (Reference Rate) of Bank Indonesia (BI), the Rupiah strengthened by 0.19% over the week to reach the level of Rp 15,654 per US Dollar.

The Rupiah’s strength was triggered by several factors, both external and internal.

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Externally, the Rupiah received support from the correction of the weakening US Dollar index, in line with disappointing US economic data. US retail sales in January 2024 declined by 0.3% on a monthly basis, lower than the expected increase of 0.5%. This data indicates a slowdown in consumption in the US, a key driver of the country’s economic growth.

Additionally, the initial jobless claims data in the US for the past week also decreased to 187,000 claims, the lowest level since September 1969. This data suggests that the US labor market is still strong but also raises concerns about inflationary pressures that could trigger a more aggressive interest rate hike by the Federal Reserve (The Fed).

Internally, the Rupiah gained positive sentiment from the results of the 2024 Presidential Election, which has the potential to take place in only one round. Various survey institutions announced results showing that candidate pair number 01, Anies Baswedan-Muhaimin Iskandar, was leading over pair number 02, Prabowo Subianto-Gibran Rakabuming, with a significant vote difference. This reduces political uncertainty and indicates democracy stability in Indonesia.

“This reduces uncertainty and the safe implementation of elections also contributes to positive sentiment in the market,” said Alwy Assegaf, Research And Development PT Handal Semesta Berjangka, to, on Friday (16/2).

However, the Rupiah’s strengthening is still limited by several lingering risks. One of them is the conflict in Ukraine, which could trigger additional sanctions from the US and its allies against Russia, potentially disrupting global geopolitical stability. In addition, investors are still awaiting the US non-farm payrolls data for February 2024, which will be released on Saturday (17/2) early morning. This data will be a crucial indicator for The Fed’s future monetary policy.

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For the next week, analysts project that the Rupiah is still likely to be under pressure from the strong US Dollar, driven by solid economic data and the recent hawkish tone of The Fed officials. Lukman Leong, Currency and Commodities Observer, predicts that the Rupiah will be traded in the range of Rp 15,500 – Rp 15,850 per US Dollar throughout the next week.

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