Lamseen – On Wednesday’s trading, the Indonesian rupiah strengthened against the US dollar, buoyed by increased demand at the government’s auction of State Securities (SBN). At the start of trading, the rupiah rose by 21 points or 0.14%, reaching 15,505 per US dollar, up from the previous rate of 15,526 per US dollar.
Josua Pardede, Chief Economist at Bank Permata, attributed the rupiah’s appreciation to high market interest in the government’s SBN auction.
“The depreciation of the rupiah is limited due to strong demand at the SBN auction,” Josua said, as reported by Antara on Wednesday (September 4, 2024).
During the auction held on Tuesday (September 3), the government successfully issued State Bonds (SUN) worth IDR 22 trillion, with total bids amounting to IDR 45.49 trillion.
Government bond trading volume on that day also increased to IDR 22.17 trillion, compared to IDR 17.63 trillion on Monday (September 2).
However, foreign ownership of Indonesian government bonds decreased by IDR 0.56 trillion, bringing it down to IDR 851 trillion, which equates to 14.48% of the total outstanding bonds as of Monday (September 2).
In addition to domestic factors, external sentiment has also contributed to the rupiah’s strength. Market participants have expressed concerns about the US economic growth outlook after manufacturing and construction sector indicators fell short of expectations.
The S&P Global US Manufacturing PMI for August 2024 dropped to 47.9, below the consensus estimate of 48. Furthermore, the ISM Manufacturing index in the US slightly increased to 47.2 from 46.8, but still fell short of the forecast of 47.5, indicating that the US manufacturing sector remains in contraction.
US construction spending also recorded a decline of -0.3% month-on-month (MoM), missing the expected growth of 0.1% MoM. This reflects weakness in the construction sector, a significant contributor to US Gross Domestic Product (GDP).
“iOS 18 Ready to Launch: Check Which iPhones Will Get the Latest Features”
The weaknesses in the manufacturing and construction sectors contribute to the risk of an economic slowdown in the US during the second half of 2024. This scenario has led to a decrease in the yield of 10-year US Treasuries (UST) by 7 basis points (bps) to 3.83%, driven by expectations that an economic slowdown might prompt the Federal Reserve to lower interest rates.
Josua Pardede forecasts that the rupiah will trade within a range of 15,475 to 15,600 per US dollar, with its strengthening supported by domestic factors like SBN demand and external pressures from weaker US economic data.
“The Complete Information From Wikipedia About Indonesian Rupiah (IDR)”
