JAKARTA - The rupiah exchange rate in trading Friday, January 31, 2025 is expected to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Thursday, January 30, 2025, the rupiah spot exchange closed down 0.24 percent to the level of Rp. 16,260 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.36 percent to a price level of Rp. 16,259 per US dollar.

Currency Observer Ibrahim Assuaibi said investors digested a little hawkish sentiment from the US Federal Reserve meeting.

"The Federal Reserve does not change interest rates as widely expected but provides little clues about further reductions in loan costs this year," he said in his statement, quoted Friday, January 31.

In addition, Fed officials made a unanimous decision to keep interest rates overnight in the range of 4.25 percent-4.50 percent at the moment, placing central banks in a pattern of temporarily suspending them pending further inflation and job data as well as clarity on the impact of President Donald Trump's policies.

Ibrahim expressed concern that the fare and hawkish Fed's stance sparked risk-off sentiment Fed officials stressed their commitment to maintaining strict monetary policy until they gained more confidence that inflation was moving continuously towards the Fed's target of 2 percent.

Ibrahim said in addition to the higher US interest rate for the long term, and the stronger dollar outlook, Asian currencies face pressure down from uncertainty surrounding Trump's tariff policy. Trump is expected to apply a 25 percent tariff on imports from Canada and Mexico starting this Saturday, with potential additional tariffs on Chinese goods.

Meanwhile, from within the country, the Government of President Prabowo Subianto and Vice President Gibran Rakabuming Raka in the first 100 days of their work have shown a strong commitment in maintaining price stability and controlling inflation through various strategic policies under control. inflation is indicated from inflation data in October-December 2024 which is still maintained within the inflation target.

Steps such as energy subsidy reform, strengthening food reserves, diversifying local food consumption and increasing food distribution efficiency are expected to have a positive impact on the Indonesian economy, especially in maintaining people's purchasing power and ensuring sustainable economic growth.

With the government's efforts to support the maintenance of inflation, the government also needs to encourage the maintained purchasing power of the people, especially middle and low income people, so that in the end public consumption will be able to solidly support Indonesia's economic growth this year.

One of the government's strategic steps is energy subsidy reform. The government is conducting a thorough evaluation of the fuel subsidy scheme. Subsidies for liquefied petroleum gas (LPG) will not be changed, while details regarding fuel and electricity subsidies are still under careful calculation.

The purpose of this reform is to reduce the burden of subsidies that reached about 16 percent of the previous year's budget spending, with the plan to convert subsidies into direct cash assistance to families in need.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading Friday, January 31, 2025 in the price range of Rp. 16,240 - Rp. 16,300 per US dollar.


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