Tuesday's Rupiah Predicted Weakening Driven By US Trade War Concerns

To note, citing Bloomberg, on Monday, February 10, 2025, the rupiah spot exchange closed down 0.46 percent to the level of Rp. 16,358 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.15 percent to a price level of Rp. 16,350 per US dollar.

Currency Observer Ibrahim Assuaibi said Trump announced a new tariff of 25 percent for all steel and aluminum imports.

According to him, this step has raised concerns over rising trade tensions and their potential impact on the global economy.

"Tarif Reply China on US goods will take effect today, and contribute more to weak sentiment," he said in his statement, quoted on Tuesday, February 10.

Ibrahim said the US was making progress with Russia to end Ukraine's war, but declined to provide details on any communications Trump made with Russian President Vladimir Putin.

According to him, the sanctions imposed on Russian oil trade on January 10 disrupted Moscow's supply to its main clients, China and India.

Ibrahim said Washington was also increasing pressure on Iran last week, with the US Treasury imposing new sanctions on several individuals and tankers helping deliver millions of barrels of Iranian crude oil per year to China.

Meanwhile, from within the country, the Government needs to encourage the manufacturing industry to support the economic growth target to grow 5.2 percent by 2025. This has seen indications of a deindustrialization trend in recent years.

"This needs to be addressed considering that manufacturing is the largest employment absorber," he explained.

Ibrahim said that if the manufacturing industry continues to weaken, the community will find it difficult to find work as a result, more and more people will work in the informal sector.

According to him, the informal sector is certainly difficult to expect to improve people's welfare, especially in the medium to long term.

"No wonder if people's purchasing power decreases, informal workers' wages are not comparable to formal workers," he explained.

Ibrahim said that economic growth will also slow down because household consumption is still the main form of gross domestic product (GDP) where household consumption itself is influenced by people's purchasing power.

"It must be remembered, Indonesia is currently experiencing serious structural challenges, which can be seen in terms of people's purchasing power which continues to be eroded and the weakening of the industry is serious enough, so a stimulus policy package is needed," he said.

The latest data from the Central Statistics Agency (BPS) shows household consumption distributing up to 54.04 percent of economic growth in 2024.

According to him, at this time, household consumption also needs to be a concern for the government, especially in designing policies this year.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Tuesday, February 11, 2025, in the price range of IDR 16,340 - IDR 16,410 per US dollar.