The Rupiah Is Predicted To Be Under Pressure, The Market Is Waiting For A Number Of Data And Policy Directions For The Fed

JAKARTA - The rupiah exchange rate in trading Thursday, December 4, 2025 is predicted to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Wednesday, December 3, the rupiah spot exchange closed down 0.02 percent to the level of Rp. 16,628 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed stagnantly at a price level of Rp. 16,632 per US dollar.

Money market observer Ibrahim Assuaibi said based on the CME FedWatch device that market participants are now predicting a chance to cut the Fed's interest rate to around 90 percent at the 9'10 December meeting.

"At the same time, the signal weakened from US economic data has strengthened speculation about cutting interest rates," he said in a statement, quoted Thursday, December 4.

He explained that investors are also waiting for the release of the private sector ADP National Employment Report for November, as well as data on the Postponed September Personal Consumption Price Index (PCE), and the two indicators are the Fed's main concern.

"The market is also speculating about the change of leadership in the Fed. Reports show that Kevin Hassett, a White House economic adviser known for his support for lower interest rates, is the leading candidate to replace current chairman Jerome Powell," he said.

According to him, this prospect further increases anticipation of looser monetary policy under the new leadership.

Meanwhile, from within the country, the Organization for Economic Co-operation and Development (OECD) assesses that Bank Indonesia still has room to continue easing monetary policy, including the possibility of cutting the benchmark interest rate to 50 basis points.

The OECD notes that the interest rate reduction cycle that has been going on since August 2024 has lowered the BI rate from 6.25 percent to 4.75 percent.

However, Ibrahim said the decline had not been fully reflected in the bank credit interest rate or corporate bond yields, which had just fallen slightly from the initial position of the easing cycle.

He said credit growth was still considered far below the historical average before the pandemic and before easing began.

According to him, with stable inflation projections and domestic demand moving in the trend range, OECD considers the opportunity for further easing to remain open.

"However, OECD emphasizes the importance of a data-dependentary BI approach being able to balance between the need to encourage economic growth with vigilance against inflation risk, especially from rupiah depreciation of around 3 percent against the US dollar since the beginning of the year," he explained.

He conveyed that the weakening was partly due to the narrowing of interest rates between Indonesia and developed countries.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Thursday, December 4, 2025, in the price range of IDR 16,620 - IDR 16,640 per US dollar.