Upiah Potentially Continues Weakening Of The Impact Of Trump's Policy Anticipation Market

JAKARTA - The rupiah exchange rate in trading Friday, January 10, is expected to weaken against the United States (US) dollar.

Quoting Bloomberg, on Thursday, January 9, 2025, the rupiah spot closed lower by 0.04 percent to the level of Rp. 16,217 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.22 percent to a price level of Rp. 16,238 per US dollar.

Director of PT Profit Forexindo Berjangka Ibrahim Assuaibi said the US bond yields continued to increase after Trump considered announcing a state of national economic emergency to provide a legal basis for a series of universal tariffs against allies and enemies as well as the growing confidence that US interest rates would fall later this year.

"Investors anticipate Trump's policies such as deregulation and lower taxes will boost economic growth, but there are concerns that the policy, along with unconfirmed tariff measures, could lead to the acceleration of inflation again," he said in his statement, quoted Friday, January 10.

In addition, the market now estimates only 39 base points of easing from the Federal Reserve this year, with a cut in interest rates likely to occur in June.

Fed Governor Christopher Waller said on Wednesday that inflation will continue to decline in 2025 and allow US central banks to further lower interest rates, although at uncertain paces.

Meanwhile, from within the country, Ibrahim explained that Indonesia's participation in BRICS could be assessed as an effort to strengthen relations not only with China but with Brazil and South Africa and the Middle East. Indonesia also has the opportunity to participate in the solidarity of South Global countries in reducing the current West hegemony.

On the other hand, Ibrahim said that the BRICS alliance did not really provide profits for Indonesia because the Chinese economy is projected to slow down, especially after Donald Trump's re-elect, which triggered trade protection.

Ibrahim conveyed that the global economic uncertainty due to the trade war between China and the US, would destabilize the economy in several countries, and this would certainly have an impact on Indonesia. In addition, Trump's threat to member countries of BRICS is to de-dominate.

"Trump's reaction needs to be watched out for, because he is one of the leaders who proves his words. If the US imposes a 100 percent tariff on BRICS member countries, of course Indonesia will be affected by the policy, it is undeniable that this will also be a challenge for the Indonesian economy in the short or medium term," he explained.

According to Ibrahim, this will also lead to a sharp decline in export volume, especially for products that rely heavily on the US market. Not only that, but concerns that stronger dependence on China still haunts Indonesia.

In order to avoid this, Ibrahim explained that Indonesia is more aggressive in diversifying partners bilaterally to survive the uncertainty of the global economy in the future.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Friday, January 10, 2025, in the price range of Rp. 16,200 - Rp. 16,250 per US dollar.