IHSG and Rupiah Slowly Strengthen

The JCI has the potential to strengthen again and the rupiah exchange rate will move in the range of IDR 16,150- IDR 16,200 per US dollar.

KOMPAS/PRIYOMBODO

The movement of the index was monitored from the monitors at the Indonesia Stock Exchange in Jakarta on Tuesday (16/4/2024). Aside from the weakening of the Composite Stock Price Index (IHSG) in the early trading, the exchange rate of the rupiah against the US dollar also showed a decline.

JAKARTA, KOMPAS — The Composite Stock Price Index or IHSG and the rupiah index strengthened on Thursday (18/4/2024) afternoon. The world's efforts to support the de-escalation of the conflict in the Middle East, as well as sentiment towards the United States' policy of lowering interest rates, which weakens the US dollar, are factors.

The Indonesian stock market index (IHSG) closed higher by 35 points or 0.5 percent at the position of 7,166 by the end of Thursday's trading. According to RTI Business, the price of 240 company stocks increased, while the price of 335 stocks decreased and the price of 208 stocks remained unchanged.

Based on the sectors, the financial sector stock index leads the highest growth at 11.76 percent, followed by the infrastructure sector index at 3.08 percent and the non-primary sector index at 0.33 percent. The sector that experienced the deepest decline is the healthcare sector stock at 14.05 percent, followed by energy at 11.81 percent, and transportation at 9.87 percent.

Head of Research NH Korindo Sekuritas Indonesia Liza Camelia Suryanata, when contacted by Kompas, explained that the JCI managed to rise to break the consolidation of the previous two days after remaining in the 7,100 area, which is the lowest point in 2024 after January 26.

Also read: Weakening of IHSG Continues, Rupiah Exchange Rate Policy Awaited

Market driving sentiment is still around adjustments to regional markets which were chaotic during the long holidays and holidays with Eid al-Fitr, April 8-15. Then, the factor of the global situation which is full of uncertainty, both the Middle East conflict and the fading prospect of cutting US interest rates, has resulted in the rupiah exchange rate rising above IDR 16,100 per US dollar, also still strong.

"This makes market players nervous and makes them choose to reduce their portfolio positions. "We still have to monitor whether foreigners start shopping again, in the last two days foreign net sales have been massive, almost reaching IDR 3 trillion," he said.

NH Korindo Securities, according to Liza, predicts that the volatility of IHSG will still be high in the future with resistance or the nearest highest price level at 7,220 or 7,280-7,300.

At the same time, the exchange rate of the rupiah against the US dollar also showed strengthening. Jakarta Interbank Spot Dollar Rate (JISDOR) from Bank Indonesia (BI) calculated that the rupiah strengthened to Rp 16,177 per US dollar compared to Rp 16,240 per US dollar the day before.

Also read: Manufacturing Industry Does Not Expect Escalation of the Iran-Israel Conflict to Increase

Conflict de-escalation

Phintraco Sekuritas analysis noted that strengthening was seen since the end of the first trading session where the IHSG grew 0.2 percent to 7,149. The improvement in the stock market index is in line with their technical predictions, targeting movements between 7,130-7,230.

"The de-escalation of conflict in the Middle East region and the strengthening of the rupiah value to Rp 16,180 per US dollar have caused the IHSG to move stronger," they said in their report.

KOMPAS/PRIYOMBODO

The atmosphere at the foreign exchange center of PT Valuta Artha Mas in Jakarta was bustling on Tuesday (16/4/2024). Referring to the Jakarta Interbank Spot Dollar Rate (Jisdor) reference exchange rate, Bank Indonesia recorded a trading rate of Rp 16,176 per US dollar on April 16, 2024. The weakening of the rupiah exchange rate is due to several global developments during the Lebaran holiday.

The potential de-escalation of the Middle East conflict, among other things, emerged after nearly 50 countries on Wednesday (17/4/2024) evening issued an appeal to regional parties Iran and Israel to try to prevent the conflict situation is escalating and promised to cooperate diplomatically in an effort to resolve tensions in the Middle East.

The statement was conveyed by representatives at the United Nations, including from countries such as Albania, Argentina, Australia, Denmark, France, Germany, Greece, Micronesia, South Korea, Ukraine, and the United States. "We note that the recent increase in Iran's attacks is the latest pattern of dangerous and destabilizing actions carried out by Iran and its militia partners, which pose a serious threat to international peace and security," the statement said as quoted by VOA news agency.

President Joko Widodo, who received an honorable visit from Chinese Foreign Minister Wang Yi at Merdeka Palace in Jakarta this afternoon, also discussed de-escalation in the Middle East. According to the President, the Indonesian government continues to conduct diplomatic communications with various parties, including Iran and the United States (Kompas.id, 18/4/2024).

Also read: Weakening Rupiah Potentially Triggers Price Surge, Entrepreneurs Hope for Intervention

Efforts for peace have been put forward despite Israel and Iran still preparing for retaliatory attacks and defense following the recent attack between the two parties. It began with Israel's air attack on the Iranian Embassy complex in Damascus, Syria on April 1, which was retaliated by Iran's attack on Israel on April 14.

Deputy General Chairperson for Organizational, Legal and Communication Sectors of the Indonesian Chamber of Commerce and Industry Yukki Nugrahawan Hanafi, to Kompas, said that the business world sees that the continuing widespread Middle East conflict could push up the price of crude oil commodities and cause a weakening of the value of exchange rupiah.

"We see that the Indonesian Government and the world need to encourage de-escalation of the conflict so as not to affect the world's economic recovery capacity," he said.

Although the national economy is still maintained and solid, as marked by solid foreign exchange reserves of up to 140 billion US dollars or equivalent to 6.4 months of imports, dependence on oil imports can further suppress the exchange rate of the rupiah.

External pressure caused by this geopolitical conflict can affect various sectors of the national economy, such as weakening of the rupiah, rising oil prices, impact on supply chains, and imported commodities. The risks posed to financial markets also continue to increase market players' concerns, as indicated by pressure on capital outflows.

Fiscal control throughout this year needs to be a factor that the government pays attention to in calculating the impact of external pressures through the escalation of conflicts in the Middle East. "Bank Indonesia also needs to pay attention to the direction of interest rate policies and exchange rate control strategies that maintain monetary stability to provide confidence in the market," the message stated.

KOMPAS/PRIYOMBODO

Officials are counting US dollars at the foreign exchange counter at PT D8 Valasindo in the Gandaria area of South Jakarta on Friday (19/4/2019). According to officials at the forex counter, the selling price of the US dollar is at Rp. 14,000 per US dollar. Based on the Jakarta Interbank Spot Dollar Rate (Jisdor) reference rate published by Bank Indonesia, the exchange rate of the rupiah on Thursday (18/4/2019), one day after the election, was recorded at Rp. 14,016 per US dollar.

The US dollar weakened

External factors related to US interest rate policy have also strengthened the exchange rate of the rupiah against the US dollar. Comments from officials at the US central bank, The Federal Reserve or The Fed, reinforced expectations that monetary regulation will remain tight for a longer period of time.

The Director of Profit Laba Forexindo Berjangka, Ibrahim Assuaibi, explained in his daily analysis that the market predicts a 44 basis point (bps) cut in The Fed's interest rates this year, far lower than the initial prediction of 160 bps at the beginning of the year, with September becoming the latest starting point for the easing cycle. However, the decline in interest rates was expected to occur in June.

"The US dollar has also weakened," he said.

For tomorrow's trading, Ibrahim predicts that the rupiah currency will be fluctuating, but potentially closing stronger at the range of Rp 16,150 per US dollar - Rp 16,200 per US dollar.

Also read: Capital Market and Rupiah Exchange Rate Fall