Sri Mulyani Reveals Weakening Of Rupiah Not Due To Bad National Economic Fundamentals
JAKARTA - Finance Minister Sri Mulyani Indrawati has agreed that the weakening of the rupiah exchange rate against the United States (US) dollar is due to global uncertainty, not due to the fundamental conditions of the national economy.
Sri Mulyani explained that the average rupiah exchange rate in the current year or year to date (ytd) from January-March 2025, was recorded at IDR 16,443 per US dollar.
Meanwhile, the rupiah exchange rate at the end of March 2025 was recorded at the level of Rp. 16,829 per US dollar. In fact, the government is targeting the rupiah exchange rate at the level of Rp. 16,000 per US dollar in the 2025 state budget macro assumption.
"The movement of the lower rupiah exchange rate reflects global dynamics and is not always the same or identical to Indonesia's fundamental foundation," Sri Mulyani said at the Press Conference of the KiTa March 2025 State Budget, Wednesday, April 30.
He explained that the rupiah exchange rate was also influenced by increased global uncertainty which caused the US Federal Reserve central bank's benchmark interest rate not to fall as previously expected, where this decline was restrained by US inflation which was still high and the labor market was tight.
"So the Fed is becoming more careful in lowering interest rates, and this causes capital flow to the US and causes DXY (US dollar index) to strengthen," he said.
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Sri Mulyani added that US President Donald Trump applied a reciprocal rate to around 70 trading partner countries that were deemed to have a surplus and needed to correct their partnerships.
According to him, this action also significantly affects the dynamics in the global financial market, causing the exchange rate to weaken against the US dollar.
"The drastic action taken by the US President affects the sentiment and dynamics of the financial sector very significantly. The uncertainty and dynamics or we call the turmoil from the financial market very large occurred in the first quarter of this year," he said.