Rupiah Potentially Weakens To Rp16,300 Per US Dollar, Amid Concerns About Uncle Sam's Country Stagflation

JAKARTA - The rupiah exchange rate in trading Tuesday, May 27 is expected to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Monday, May 26, the rupiah spot exchange closed down 0.19 percent to the level of Rp. 16,249 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.50 percent to a price level of Rp. 16,207 per US dollar.

Currency observer Ibrahim Assuaibi said the sale of US government bonds was persistent, as markets remained vigilant against U.S. fiscal health which worsened and increased debt levels.

"The Fed's Kashkari warns of the risk of stagflation from Trump's rates. Kashkari also said it was impossible for Feds to change interest rates in September, amid rising economic uncertainty," he said in a statement, quoted Tuesday, May 27.

Ibrahim added that Trump had agreed to postpone the 50 percent tariff he recently proposed at the European Union until early July, citing positive dialogue with EU chief Ursula Von Der Leyen.

In addition, the move came after Trump threatened to impose a 50 percent tariff on the EU from early June, citing a lack of progress in trade negotiations.

Although Trump's announcement on Sunday did provide a little relief to the market, traders seem unsure of the US President's policy.

Meanwhile, from within the country, Ibrahim conveyed that the performance of the State Revenue and Expenditure Budget (APBN) recorded a surplus of IDR 4.3 trillion, or equivalent to 0.02 percent of gross domestic product (GDP).

Whatever, this surplus is a turning point after the first three months of 2025 experienced a consecutive budget deficit.

The surplus state budget is mainly due to the acceleration of state revenue which is faster than the realization of spending. As of April 30, 2025, state revenues were recorded at IDR 810.5 trillion or 27 percent of the target this year. Meanwhile, state spending was realized IDR 806.2 trillion or around 22.3 percent of the 2025 APBN ceiling.

This surplus is quite significant considering that in the period January to March, the APBN experienced a deficit of IDR 23.5 trillion, IDR 31.2 trillion, and IDR 104.2 trillion, respectively. The deficit is mainly caused by technical factors such as tax restitution and effective tariff adjustments in tax calculations.

The surplus achieved in April showed that revenue performance began to recover, although year-on-year (yoy) it still showed a decline. State revenues fell 12.4 percent compared to last April.

This decline came from tax revenues which corrected 8.7 percent to Rp657 trillion, and non-tax state revenues (PNBP) which fell 24.7 percent to Rp153.3 trillion. In tax revenues, tax revenues fell 10.8 percent to Rp557.1 trillion.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, May 27, 2025, in the price range of IDR 16,240 - IDR 16,300 per US dollar.