Wednesday's Rupiah Predicted Weakening Due To Trade War Policy

To note, citing Bloomberg, on Tuesday, March 4, the rupiah spot exchange closed up 0.21 percent to the level of Rp. 16,445 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.38 percent to a price level of Rp. 16,433 per US dollar.

Currency Observer Ibrahim Assuaibi said US President Donald Trump had confirmed that a 25 percent tariff for imports from Mexico and Canada would take effect on March 4, 2025, at 5.01 GMT. In addition, Trump also signed an order to increase the tariff on Chinese goods from 10 percent to 20 percent.

"The increase in tariffs on Chinese goods is increasingly tense with relations between the US and China. China has promised to take countermeasures against US tariffs to protect its interests, while Canada is preparing for its own retaliation, their government said on Tuesday," he said in a statement, quoted Wednesday, March 5.

According to him, this tariff is expected to increase trade uncertainty, disrupt supply chains, and weaken export demand, thereby harming economic growth and investor confidence in the Asian market.

In addition, the temporary suspension of all US military aid to Ukraine was confirmed by a White House official on Monday following clashes between Trump in the Oval Room with Ukrainian President Volodymyr Zelenskiy last week.

"The market has seen the distance between the White House and Ukraine as a sign of a potential easing of the conflict that could lead to the lifting of sanctions for Russia," he explained.

Ibrahim conveyed the temporary suspension following a Reuters report that the White House had asked the State Department and Finance to compile a list of sanctions easing for US officials to discuss with Russian representatives in the coming days as part of talks with Moscow, sources said.

Meanwhile, from within the country, Indonesia continues to show resilience that deserves appreciation because in the midst of continued global challenges, the Consumer Satisfaction Index (IKK) was recorded at an expansionary level of 127.2 in January, while the Retail Sales Index (IPR) still grew positively 0.4 percent.

Ibrahim conveyed this as a strong signal that people's purchasing power was maintained and became the main pillar of supporting national economic growth.

Meanwhile, the stability of public consumption was supported by various government policies, including a 50 percent discount on electricity rates in January and February 2025.

Ibrahim said this program not only helped reduce household spending, but also contributed to deflation of 0.09 percent on an annual basis in February.

On the other hand, the Administered Price component also recorded a sharp deflation of up to 9.02 percent, becoming the main factor in suppressing inflation.

In addition, he added, the government continues to prepare strategic steps to face Ramadan and Eid Al-Fitr 2025. Market operations, low-cost market movements, and food distribution supervision are strengthened to ensure the prices of basic necessities remain affordable.

Ibrahim said that not only basic needs, incentives such as discounted toll rates and exemption from VAT for airplane tickets were also rolled out to support community mobility during Lebaran homecoming.

"Through this policy, it can help people celebrate Eid al-Fitr with their families without being burdened with high costs, as well as providing additional impetus to national economic growth," he said.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on Wednesday, March 5, 2025, in the price range of Rp. 16,430 - Rp. 16,500 per US dollar.