The recent fluctuations in the exchange rate between the Indonesian Rupiah (IDR) and the US Dollar (USD) have sparked discussions among investors and economists alike. A key factor contributing to this volatility is the release of the US Gross Domestic Product (GDP) data, which has significant implications for currency markets worldwide.
On [date], according to data from Refinitiv, the Rupiah opened weaker against the US Dollar, depreciating by 0.19% to reach Rp15,710/USD. This depreciation follows a similar trend observed on [previous date], where the Rupiah weakened by 0.29%, marking a fifth consecutive day of decline.
Meanwhile, the US Dollar Index (DXY) at 14:58 WIB fell to 103.89, representing a decrease of 0.08% compared to the previous trading day's closing at 103.97.
The depreciation of the Rupiah coincides with the release of robust US GDP data for the fourth quarter of 2023, which was revised to a growth rate of 3.2%, slightly lower than the initial estimate of 3.3%.
Throughout 2023, the US economy expanded by 2.5%, surpassing the 1.9% growth recorded in 2022. Consumer spending, accounting for approximately 70% of US economic activity, grew at an annual rate of 3% from October to December last year.
Although the final GDP figure for the fourth quarter of 2023 may indicate a slight slowdown compared to the third quarter, the range of 3.2-3.3% growth remains relatively high, especially considering that the US GDP was below 3% in the second half of 2022 and the first half of 2023.
The robust US GDP figures signify the resilience of the US economy, indicating that inflation levels remain relatively high. Despite the depreciation of the Rupiah against the US Dollar, Bank Indonesia (BI) remains committed to maintaining monetary stability, including keeping inflation low and the exchange rate stable, supported by prudent macroeconomic policies to bolster economic growth.
While the current market conditions present challenges for the Rupiah, BI's focus on maintaining stability and supporting economic growth is expected to instill positive sentiment among investors amidst ongoing currency pressures.
Through a deeper understanding of the interplay between US economic indicators and the Rupiah's performance, investors can better navigate the dynamic landscape of currency markets and make informed decisions to protect and grow their investments.