Market Reduces US Recession Expectations, Rupiah Predicted To Strengthen

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, April 11, is expected to move higher against the United States (US) dollar.

To note, citing Bloomberg, on Thursday, April 10, the rupiah spot rate closed up 0.30 percent to the level of Rp. 16,823 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.96 percent to a price level of Rp. 16,779 per US dollar.

Currency observer Ibrahim Assuaibi said the market was reducing some expectations for the US recession. However, the short-term economic outlook remains uncertain, with minutes of the March Federal Reserve meeting showing policymakers nervous over higher inflation and slower growth.

While fears of a recession eased after Trump announced a 90-day extension to impose his latest reciprocal rate round, the market remains wary of its policy agenda, especially given its recent change in attitude over tariffs.

"The escalating trade war with China also presents sustainable economic barriers to the US, considering that the country is still the main trading partner," he said in a written statement, quoted Friday, April 11.

In addition, Ibrahim explained that the US-Chinese trade war was heating up, after Trump raised US rates against the country to 125 percent unprecedented.

Meanwhile, Beijing returned Trump's rates on Wednesday by charging a reply rate of 84 percent on American goods.

Neither Washington nor Beijing have shown any intention of easing tensions, with Chinese officials vowing to fight until the end.

Meanwhile, the impact of the high US tariff has made Chinese exports cheaper. However, China's economy faces an increase in barriers from US tariffs.

"Data released earlier on Thursday shows consumer inflation and Chinese manufacturers shrink more than expected in March, reflecting some of the impacts of China-US trade aggression," he said.

Meanwhile, from within the country, Ibrahim conveyed that geopoliticals in East Tengan and Europe, which are increasingly heating up along with trade war genders, can increase global economic uncertainty that affects the Indonesian economy, especially in fluctuations in the rupiah exchange rate.

However, the Government and Bank Indonesia continue to intervene in the market to stabilize their currency, but the Government and BI have limitations in overcoming economic uncertainty.

The government recognizes that trade wars have the potential to increase the price of imported goods. Although not many components of products are made in America and exported to other countries as raw materials, their prices could rise and increase the price of imported goods, potentially suppressing inflation.

In addition, it also has an impact on the decline in international trade because high tariffs that make imported goods more expensive, as well as countries in areas such as ASEAN that depend on exports to major countries can experience a decrease in profits in trading.

Ibrahim said that so that it could potentially affect ASEAN areas and companies affected by trade wars will adjust their supply chains, one of which is diverting production from China to other countries to avoid high tariffs.

Then the production transfer will create new opportunities for ASEAN countries, but also pose new challenges such as infrastructure readiness and trade policy.

Furthermore, trade wars often worsen diplomatic relations between major countries, political stability and regional economic cooperation are the impact.

"National countries in the region must face challenges in maintaining good relations with all parties involved. Moreover, resolving trade war conflicts requires complex diplomatic negotiations and spending a lot of time," he said.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, April 11, 2025 in the price range of Rp. 16,750 - Rp. 16,830 per US dollar.