Rupiah predicted to strengthen in Monday trading

Analyst Rully Nova from Bank Woori Saudara predicts the rupiah exchange rate against the US dollar will strengthen during Monday trading, influenced by dovish statements from Federal Reserve Governor Kevin Warsh. “The rupiah today has room to strengthen in the range of Rp17,920 to Rp17,970, influenced by global factors such as the weakening dollar index following the dovish remarks from the Fed Governor, which led market expectations towards the cancellation of interest rate hikes this year, and the continued decline in oil prices,” he told ANTARA in Jakarta on Monday. At the opening of Monday morning trading, the rupiah exchange rate against the US dollar briefly weakened by 29 points, or 0.16 percent, to Rp17,992 per US dollar, compared to the previous close of Rp17,963 per US dollar. Citing Anadolu, the market had previously estimated an 82 percent probability of an interest rate hike in October. However, after the release of US nonfarm payroll data for June, which came in lower than market expectations, the probability of a rate hike in September fell from 67 percent to 63 percent, supported by optimism regarding geopolitical developments. According to Rully, the Federal Reserve Governor is more cautious about future US inflation due to the impact of rising oil prices in the first half of the year and its effect on inflation in the second half. Nevertheless, labour market data is of greater concern to the Fed, as it could have a deeper impact on the US economy. “On the domestic front, factors weighing on the rupiah’s strengthening include economic data such as fiscal space, the trade balance deficit, and foreign exchange reserves,” he said.