Donald Trump Elected As US President, Rupiah Predicted To Be Sluggish To Rp. 16,000 Per Dollar

Donald Trump (unsplash)

JAKARTA - Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira said the election of Donald Trump as President of the United States (US) would put pressure on the rupiah exchange rate, with the possibility of being above Rp. 16,000.

According to Bhima, this can be seen that foreign investors tend to withdraw funds from emerging markets, including Indonesia. Where on November 6, 2024, the net sale of shares by foreign investors reached a fairly large figure, which was IDR 1.5 trillion.

"The production of the rupiah was above Rp. 16,000 in a short time. Because Trump's effect also made investors withdraw funds from the developing country market and this can be seen, for example, on November 6, 2024, net sales or net sales of shares by foreign investors reached Rp. 1.5 trillion," he told VOI, Thursday, November 7.

Bhima conveyed this indicating that more investors had left the Indonesian stock market and were looking for instruments that were considered safer, one of which was the United States and Gold dollars, which experienced a significant price increase.

In addition, the protectionism policy implemented by Trump, including high tariffs on a number of goods, has the potential to worsen the prospect of Indonesia's commodity demand for the Chinese and US markets. This could lead to a decline in demand for Indonesia's superior products, such as commodities and industrial goods, in the medium term.

"At least during Trump's tenure, there will be a weakening demand from various types of commodities and industrial products from Indonesia, especially to the markets of these two countries, China and America," he explained.

In addition, Bhima said that the United States market for Indonesia cannot be underestimated. Although China is currently Indonesia's main export destination and the US is still a strategic trading partner with significant contributions.

As for Trump's previous leadership, Indonesia did not even benefit from the industrial relocation that occurred due to the American-China trade war. Countries such as Vietnam, Malaysia, Thailand, and Cambodia actually benefited greatly from the relocation, while Indonesia did not receive a significant industrial allocation.

"This means that Trump's victory is a bad signal for the Indonesian economy. Especially because America is still a traditional trading partner, the portion is still quite large," he said.

In addition, Trump's extreme policy is predicted to disrupt the continuation of the Inflation Reduction Act (IRA) program which also adds to concerns. In particular, there is the potential for a decrease in demand for processed nickel from Indonesia, which could disrupt the prospects for downstreaming the Indonesian industry in the future.

"So indeed we have to respond to this carefully, because if Donald Trump's extreme policy, including the EV issue, which will not continue Joe Biden's Inflation Reduction Act, the IRA will not be continued, so there are concerns that demand for processed nickel from Indonesia will also fall. So this will disrupt Indonesia's future downstream prospects," he explained.