Jakarta, 5 January 2024 – The rupiah exchange rate recorded significant strengthening in early 2024, reaching a level of IDR 15,500 per United States (US) dollar. This strengthening was driven by market optimism regarding Indonesia’s economic prospects and expectations of the Federal Reserve (Fed) easing monetary policy.
“The Rupiah has strengthened 2.3% since the beginning of the year, making it one of the best performing Asian currencies,” said Head of the Communications Department of Bank Indonesia, Erwin Haryono, in his official statement.
Factors Driving Strengthening
1. Domestic Conditions
-Inflation under control at 3.1%
-Foreign exchange reserves increased to US$145 billion
-Trade balance surplus of US$3.5 billion
-Foreign capital flows into domestic financial markets
2. External Factors
-Global US dollar weakening
-Expectations of the Fed’s interest rate cut
-Improvement of China’s economy
-Stability of global commodity prices
Impact on the Economy
The strengthening of the rupiah has a positive impact on:
Reduced import costs :
-Stability of prices for consumer goods
-Reducing the foreign debt burden
-Increased investor confidence
“The strengthening of the rupiah has had a positive impact on price stability and the competitiveness of Indonesia’s exports,” said Institute for Development of Economics and Finance (INDEF) economist, Bhima Yudhistira.
Future Projections
Bank Indonesia projects that the rupiah exchange rate will move stably in the range of IDR 15,300-15,700 per US dollar throughout 2024, supported by:
-Strong economic fundamentals
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