Rupiah Projected to Weaken, Market Watches for Dovish Signals from the Fed
JAKARTA - The rupiah exchange rate on Tuesday, December 16, 2025 is predicted to weaken against the US dollar.
To note, quoting Bloomberg, on Monday, December 15, the spot rupiah exchange rate closed down 0.13 percent to Rp16,667 per US dollar.
Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of the Bank Indonesia (BI) closed down 0.10 percent at a price level of Rp16,669 per US dollar.
Money market observer Ibrahim Assuaibi, assessed that the weakening was influenced by the dovish stance of the US Central Bank (The Fed), after cutting interest rates last week and also signaled that it would start buying short-term government bonds starting December with a value of around 40 billion US dollars per month.
"The Fed's asset purchase activity presents a dovish outlook for monetary policy, especially given that local liquidity conditions are likely to loosen further with cash injections," he said in a statement, quoted Tuesday, December 16.
On the other hand, he added that market participants' attention this week was focused on the release of US non-farm employment data as well as consumer inflation data (CPI) for the November period, which are scheduled for Tuesday and Thursday, respectively.
Meanwhile, employment data, which is generally announced on the first Friday of each month, has been delayed due to the US government shutdown, which lasted quite a long time in October and November.
Ibrahim added that the market would pay attention to indications of slowing labor growth and a decline in the rate of inflation, given that both factors are the Fed's main considerations in determining the direction of interest rates.
"The data will also be the latest official economic data available to the market after the government shutdown disrupted some important data for October," he explained.
Meanwhile, from within the country, Ibrahim assessed that 2026 has the potential to be a period of full uncertainty and competition between major countries is expected to intensify, global alliance changes can occur, and regional conflicts are at risk of spreading.
A number of international institutions such as the IMF, World Bank, ECB, and OECD also project a slowdown in global economic growth accompanied by fragmentation and structural transformation.
"This slowdown is caused by a weakening world trade, supply chains that are restructured for security rather than just efficiency, public debt in many countries at the highest point, and the development of technology that is faster than the issuance of new regulations," he explained.
On the other hand, the valuation of assets in a number of countries is considered vulnerable after sharp increases in recent years, while the banking sector is still facing pressure from non-performing loans and portfolio losses due to high interest rates.
According to him, a high interest rate environment that lasts longer also has the potential to burden the business world by 2026.
He added that social and political uncertainty had also increased, thereby increasing the risk of a global economic slowdown, increased protectionism, energy instability, prolonged conflicts, and difficult-to-anticipate technological disruptions.
He added that social and political uncertainty had also increased, thereby increasing the risk of a global economic slowdown, increased protectionism, energy instability, prolonged conflicts, and difficult-to-anticipate technological disruptions.
Ibrahim predicted that the rupiah would move fluctuatio but closed weaker on Tuesday, December 16, 2025 in the price range of Rp16,660 - Rp16,690 per US dollar.