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Rupiah weakens against dollar as investors await US Fed's decision

Jakarta Globe - April 30, 2024

Grace el Dora, Jakarta – The rupiah weakened further against the dollar in Tuesday's trading. Bank Woori Saudara analyst Rully Nova stated that the market is awaiting the direction of US interest rates through the Federal Open Meeting Committee (FOMC) meeting this week.

The exchange rate of the rupiah fell by 15 points or 0.09 percent to Rp 16,270 per dollar, compared to the previous level of Rp 16,255 per US dollar.

"Today, the rupiah is predicted to continue weakening against the dollar in the range of Rp 16,250 to Rp 16,310, influenced by external factors ahead of the Federal Reserve meeting on Thursday, which will determine interest rates," said Rully in his notes on Tuesday.

He predicted that The Fed's policy interest rate would remain unchanged at 5.5 percent.

From the domestic side, market participants are still awaiting April 2024 inflation data, which is expected to be higher than in March 2024.

Based on data from the Central Statistics Agency (BPS), inflation in March 2024 was recorded at 0.52 percent month-on-month, bringing the year-on-year (YoY) inflation to 3.05 percent, still within the central bank's target.

The Federal Reserve will begin its two-day meeting on Tuesday. According to NH Sekuritas Indonesia research, the Fed is widely expected to hold interest rates in place; however, market participants will focus on statements from Chairman Jerome Powell, especially if his comments tend to be hawkish.

Financial institution UBS believes the US is still on an economic path that can avoid recession and achieve a soft landing, so they hold hope that the Fed could cut interest rates this year.

Elsewhere, Macquarie no longer expects a Fed rate cut in 2024 and has pushed back the first projected pivot to 2025, based on the premise that Core PCE Inflation will only reach the 2 percent target next year.

Source: https://jakartaglobe.id/business/rupiah-weakens-against-dollar-as-investors-await-us-feds-decisio