Strengthening This Week, Rupiah Exchange Rate Await GDP Data Next Week
The Rupiah showed a positive trend in trading this week. The Indonesian currency has strengthened again and is at IDR 16,200 per United States (US) dollar.
According to Bloomberg data, on Friday (2/8), the spot rupiah exchange rate closed at IDR 16,200 per US dollar. This shows a strengthening of 0.23% compared to the previous days closing of IDR 16,237 per US dollar. During the week, the spot rupiah strengthened by 0.61%.
In line with movements in the spot market, the Jisdor Bank Indonesia (BI) rupiah exchange rate also experienced strengthening. On Friday (2/8), the Jisdor exchange rate closed at IDR 16,234 per US dollar, strengthening 0.41% weekly and 0.055% daily.
Currency Market Analyst, Lukman Leong, explained that the strengthening of the rupiah was driven by less strong US economic data. The rupiah was also supported by dovish statements from Federal Reserve Chair Jerome Powell indicating the possibility of cutting interest rates at the FOMC meeting next September.
However, concerns about the global economic downturn this week as well as tensions in the Middle East limit the potential for further strengthening of the rupiah, said Lukman to Kontan.co.id
Lukman also projects that the movement of the rupiah in trading Monday (5/8) will depend heavily on US Non-Farm Payrolls (NFP) labor data. He saw that the rupiah might strengthen if the data matched estimates or was lower than the 175,000 job additions.
However, concerns about the global economy could limit the rupiahs strengthening and perhaps even weaken, he added.
On the domestic side, Lukman said that investors were waiting for data on Indonesias economic growth for the second quarter of 2024, which is estimated to grow solidly by 3.71%. However, on an annual basis, the Indonesian economy is estimated to only grow 5%, slightly lower than the previous 5.11%.
Lukman estimates that the rupiah will move in the range of IDR 16,150 per US dollar to IDR 16,250 per US dollar in trading Monday (5/8).
In line with this, Bank Permata Chief Economist Josua Pardede said that the strengthening of the rupiah on Friday (2/8) was driven by investors expectations regarding possible signals of weakening US employment data.
Consensus figures show an expected decline in NFP data, even though the unemployment rate is expected to tend to stabilize, said Josua to Kontan.co.id, Friday (2/8).
According to him, if US employment data shows further weakness, this could increase the possibility of the Federal Reserve cutting interest rates more than once this year. Josua explained that this week, the rupiah tends to strengthen against the US dollar following a dovish signal from the Federal Reserve.
Josua predicts that next week, the movement of the rupiah will be influenced by the release of US employment data which was announced Friday evening, as well as data on Indonesias Gross Domestic Product (GDP) on Monday (5/8).
Thus, I project that the rupiah has the potential to strengthen next week and move in the range of IDR 16,100 per US dollar to IDR 16,250 per US dollar, said Josua.
Source : Kontan.co.id
Aug 3, 2024
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