Rupiah Is Predicted To Continue Weaken Due To Global Economic Concerns

Illustration (Photo: Doc. ANTARA)

JAKARTA - The rupiah exchange rate in trading Thursday, April 17, is expected to weaken against the United States (US) dollar.

Quoting Bloomberg on Wednesday, April 16, the rupiah spot exchange rate was closed down 0.06 percent to the level of Rp. 16,837 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.17 percent to a price level of Rp. 16,845 per US dollar.

Currency observer Ibrahim Assuaibi said investors are continuing to struggle in finding catalysts to encourage a more meaningful recovery, as global growth is widely expected to slow down as US rates, which jeopardize the global economy.

"Trump has raised tariffs on Chinese goods to a very high level, prompting Beijing to impose retaliatory duties on US imports in an increasingly intensive trade war between the world's two largest economies, which it is feared the market will cause a global recession," he said in a statement, quoted Thursday, April 17.

As a further sign of rising tensions, Ibrahim said, China has ordered its airlines not to accept further Boeing jet deliveries in response to the US's decision to impose a rate of 145 percent on Chinese goods.

In addition, GDP data shows China's economy grew 5.4 percent (you) in the first quarter, higher than 5.2 percent expected. GDP growth on a quarterly basis was at 1.2 percent (qoq), slightly missed expectations of 1.4 percent.

"The strong GDP figure comes after a series of aggressive measures from Beijing until the end of 2024, as governments move to shore up local economic growth," he explained.

Ibrahim added that the GDP figures cover potential barriers for China from a fierce trade war with the US, which is likely to burden growth in the coming quarters.

US President Donald Trump imposed a cumulative rate of 145 percent on China, which triggered a 125 percent reply from Beijing.

Meanwhile, from within the country, Ibrahim said that Indonesia's economic growth in the first quarter of 2025 is predicted to slow down to around 4.9 percent to 5 percent. This projection slowed down from economic growth in the fourth quarter of 2024 which reached 5.02 percent.

Meanwhile, this year's economic growth is estimated to be only around 4.8 percent to 5 percent, lower than the target in the 2025 macroeconomic assumption of 5.2 percent, and also the target in the 2025-2029 National Medium Term Development Plan (RPJMN) that this year's economy is targeted to grow 5.3 percent.

From the domestic side, the challenges of structural reform and the effectiveness of government spending, the need to increase productivity in the real sector, the effectiveness of fiscal and monetary policy, and the urgency of strengthening domestic economic fundamentals are considered to be an obstacle to the pace of the economy.

In fact, fiscal conditions at the beginning of the year that were quite worrying, such as the State Budget as of March 2025 reached IDR 104.2 trillion, or equivalent to 0.43 percent of gross domestic product (GDP).

This figure is about 16.9 percent of the state budget deficit target by 2025 which is valued at IDR 616.2 trillion or equivalent to 2.53 percent of GDP.

In addition, Ibrahim said that people's purchasing power was still decreasing, marked by the January-February 2025 deflation, there were layoffs and a fairly large number of unemployed, jobs were still minimally absorbed, including the labor-intensive industry.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Thursday, April 17, 2025, in the price range of IDR 16,830-IDR 16,890 per US dollar.