TEMPO.CO, Jakarta – The Rupiah strengthened against the US dollar at the close of trading today, May 6. The exchange rate closed 57 points higher at Rp16.025 per dollar. At the end of trading last week, the rupiah closed at Rp16.083 per dollar.
Today, the Central Statistics Agency or BPS announced that the economy grew 5.11 percent year-on-year in Q1/2024, higher than the 5.04 percent growth in Q4/2023.
The first quarter growth was supported by household consumption, the momentum of Eid, general election. Forexindo Berjangka’s director of profit Ibrahim Assuaibi said the timing of Ramadan, which fell in the first quarter, caused a low base effect that contributed to high economic growth.
“There was also the increase in spending related to the 2024 presidential election, which further boosted spending by the government and non-profit institutions that serve households, including political parties,” he said on Monday.
Ibrahim said the US dollar’s depreciation came as April’s non-farm payrolls data came in lower than expected, reinforcing speculation that a weakening labor market will provide greater impetus for the Fed to start cutting interest rates.
Friday’s data showed that US job growth slowed more than expected in April. Annual wage gains also fell below 4 percent for the first time in nearly three years.
“Signs of a weakening labor market increase optimism that the Federal Reserve can design a soft policy for the economy.”
According to Ibrahim, the market is predicting a 45-basis point cut in the Fed funds rate this year, which has been calculated since November.
The Fed is holding rates steady at the end of its two-day meeting, but has indicated that it is still inclined to cut rates. “Even if it takes longer than initially estimated,” Ibrahim said.
ANNISA FEBIOLA
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