Jambiflash.com – The exchange rate of the rupiah currency closed down by 65 points or 0.40 percent to the level of Rp16,430 per US dollar in today’s trading. According to Bloomberg data, the rupiah had opened at the level of Rp16,390 per US dollar.
Currency market observer, Ibrahim Assuaibi, stated that traders are currently waiting for more clues regarding policy in the United States (US). Meanwhile, the Bank of England will hold a meeting where interest rates are expected to remain unchanged.
“In addition to the BoE, investors will also monitor the decisions of the Swiss and Norwegian central banks on Thursday to determine the global interest rate outlook,” Ibrahim said in his research on Thursday (June 20, 2024).
Data on Wednesday showed that UK inflation returned to the 2 percent target for the first time in almost three years in May. However, strong price pressures ruled out a rate cut ahead of next month’s elections.
Most economists in a Reuters poll last week expected the central bank to start cutting rates in August, but the market only sees a 30 percent chance of a rate cut in August and thinks the first move is more likely to be in September or November.
From the domestic sentiment, Bank Indonesia (BI) again maintained the benchmark interest rate or BI Rate at 6.25 percent in the Board of Governors Meeting (RDG) held on June 20-21, 2024. Meanwhile, the Deposit Facility rate rose to 5.50 percent and the Lending Facility rate to 7 percent.
This decision is consistent with a pro-stability monetary policy as part of a preemptive and forward-looking measure to ensure inflation is in line with the target of 2.5 plus or minus 1 percent in 2024 and 2025. This policy will be supported by strengthening monetary operations to enhance the effectiveness of rupiah stability and the inflow of foreign capital.
The reason BI maintains the interest rate is due to the global economy’s growth forecast, which is higher than previously predicted, reaching 3.2 percent in 2024. This figure is higher than initial estimates, particularly with better economic growth in India and China.
Although global financial market uncertainty remains high amidst stronger global economic prospects, the rupiah has now breached the level of Rp16,430.
Meanwhile, macroprudential and payment system policies remain pro-growth, supporting sustainable economic growth to encourage banking credit/financing to businesses and households.
Based on the above data, the rupiah is predicted to move fluctuatively in the next trading session but is expected to close weaker in the range of Rp16,420-Rp16,500. (nas)
