Rupiah Potentially Strengthens Amid US Government Shutdown Threats

JAKARTA - The rupiah exchange rate in trading Tuesday, September 30 is expected to move higher against the United States (US) dollar.

To note, citing Bloomberg, on Monday, September 29, the rupiah spot exchange closed higher by 0.35 percent to the level of Rp. 16,680 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.35 percent to a price level of Rp. 16,680 per US dollar.

Currency observer Ibrahim Assuaibi said that the market is preparing to face the potential shutdown of the US government this week amid a bipartisan effort that is mediocre to pass the funding bill.

"Funding for US federal operations will end at midnight on September 30, as Congress does not yet have a replacement fund or extension," he said in a statement, quoted Tuesday, September 30.

In addition, Ibrahim said geopolitical tensions were heating up again after Russia hit Kyiv and other regions in Ukraine on Sunday morning in one of the biggest attacks on the capital since the full-scale war began.

Meanwhile, the United Nations has reimposed its arms embargoes and other sanctions against Iran over its nuclear program, following a process triggered by European powers that Tehran has warned will respond with a strong response.

Meanwhile, from within the country, Ibrahim said that the importance of consistency of fiscal and monetary policy signals is to maintain rupiah stability amid strengthening the US dollar and global market turmoil.

He said that the instruments of Bank Indonesia (BI) and the government were adequate, but coordination and communication needed to be strengthened so that market expectations were controlled.

According to him, BI has used all exchange rate stabilization instruments, starting from intervening in the spot market, Non Deliverable Forward (NDF) onshore, to purchasing Government Securities (SBN), but the rupiah currency is close to IDR 16,800 per US dollar, weakening by more than 3 percent year to date (ytd).

In addition, Ibrahim said that the August foreign exchange reserves were recorded at 150.7 billion US dollars, down from July due to government debt payments and stabilization measures, but still far above the international adequacy standard.

Meanwhile, from the fiscal side, the deficit in the state budget from January to August reached 1.35 percent of GDP or Rp. 321.6 trillion with revenues falling 7.8 percent (yoy) and spending up 1.5 percent (yoy).

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Tuesday, September 30, 2025 in the price range of IDR 16,630 - IDR 16,680 per US dollar.