THE rupiah exchange rate against the US dollar on Monday (12/8) slipped due to strong signals of a US interest rate cut. At the start of Monday morning trading, the rupiah weakened 25 points or 0.16% to 15,950 per US dollar from the previous 15,925 per US dollar.
“The market reaction to Jerome Powell’s statement last week gave a strong signal of interest rate cuts. Powell said that if inflation moves down, it is more or less in line with expectations,” said Finex analyst Brahmantya Himawan when contacted in Jakarta, Monday.
However, the collapse of the labor market released last Friday, namely the NFP figure, signaled a slowdown in the US economy, which made investors worried about the path of the US economy to recession. The market has been fully pricing in a rate cut in September 2024 for some time, with the US central bank or The Fed Chairman Jerome Powell saying that policymakers are not considering a 50 basis point (bps) rate cut at this time.
This is good news for the rupiah to get a boost from the US dollar’s dominance. Brahmantya said that the US interest rate cut at the Fed’s September meeting would have two impacts, namely a soft landing or a hard landing, but the September interest rate cut would provide a clear scenario that the rupiah is on a strengthening path against the US dollar’s dominance.
Therefore, he estimated that in today’s trading the rupiah has the potential to strengthen to 15,850 per US dollar. Meanwhile, the rupiah has the potential to be traded in the price range of 15,950 per US dollar to 15,850 per US dollar. (Ant/Z-2)
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