The Rupiah Is Predicted To Weaken Amid The Uncertainty Of The US Trade War

JAKARTA - The rupiah exchange rate in trading Wednesday, February 19, 2025 is expected to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Tuesday, February 18, 2025, the rupiah spot exchange rate closed down 0.31 percent to the level of Rp. 16,278 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.41 percent to a price level of Rp. 16,275 per US dollar.

Currency Observer Ibrahim Assuaibi said there was ongoing uncertainty over US President Trump's plans regarding trade rates, as he hinted that his reciprocal rate on US trading partners would only be imposed in April.

"But reports over the weekend suggest the European Union is considering import controls on certain US items, a move that could mark an increase in trade tensions with the US," he said in a statement, quoted Wednesday, February 19.

Trump last week charged 25 percent of all steel and aluminum imports, raising concerns over retaliatory measures from other countries. In addition, the market remains vigilant against US interest rates that remain high for longer periods of time.

Ibrahim said the focus of investors this week will be on the release of minutes of the Federal Reserve meeting in January to measure how policymakers have sought to consider the risk of a wider tariff war following President Donald Trump's trade policy.

Last week's data showed US consumer prices were increasing at the fastest rate in nearly 18 months in January, strengthening Fed's message that they were not in a hurry to continue cutting interest rates amid rising economic concerns.

Meanwhile, from within the country, the 100 percent Natural Resources (SDA) Export Result Foreign Exchange Policy (DHE) a year will be challenging for exporters. This policy will mainly disrupt business cash stability. In addition, the same policy will also change the capital structure of industry players who still use imported raw materials.

In the future, his party also indicated that industry players will also bear a higher cost than before, especially working capital for imports comes from bank loans. And this policy will disrupt the flow of exporters' cash, especially for small and moderate industrial exporters.

Industry still has a gap to outsmart the DHE SDA policy. You do this by under-invoiting or placing foreign exchange illegally in a country that provides more lucrative placement instruments.

This is where the level of entrepreneur compliance will be tested for the implementation of this policy. Moreover, if there are no interesting and flexible financial instruments for exporters to carry out DHE SDA. During 2024, based on his records, the DHE SDA PP 36/2023 policy only managed to include 14 billion US dollars.

This achievement is well below the government's 2023 target of 40-49 billion US dollars, although the level of compliance is claimed to almost reach 90 percent. The DHE SDA policy is expected to strengthen foreign exchange reserves so that fluctuations in the exchange rate

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Wednesday, February 19, 2025, in the price range of IDR 16,280 - IDR 16,320 per US dollar.