JAKARTA - The rupiah exchange rate in trading Friday, May 23 is expected to move higher against the United States (US) dollar.
To note, citing Bloomberg, on Thursday 22 May, the rupiah spot exchange closed up 0.44 percent to the level of Rp. 16,328 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.61 percent to a price level of Rp. 16,313 per US dollar.
Currency observer Ibrahim Assuaibi said the US dollar remains weak amid concerns over the buildup of US debt, while investors await a full vote that is important over the tax cuts bill by US President Donald Trump.
"The market is cautious because the proposed bill, if passed, will further increase US government spending and widen the fiscal deficit," he said in his statement, quoted Friday, May 23.
Ibrahim added that this decline follows a recent decline in the US state's credit rating from Aaa to AA1 by Moody's, citing rising debt levels.
In addition, the US House of Representatives is preparing to vote on the tax cutting bill proposed by President Donald Trump.
Meanwhile, the law aims to extend tax cuts in 2017 and introduce new tax breaks. However, critics argue that the bill could add between $3 trillion to $5 trillion in national debt over the next decade, which exacerbates fiscal deficits.
Meanwhile, from within the country, Ibrahim said that Bank Indonesia recorded a current account deficit/CAD continued the trend of shrinking to USD 0.2 billion in the first quarter of 2025 compared to the last two quarters, in the fourth quarter of 2024 CAD was recorded at USD 1.1 billion in the third quarter of 2024 at the level of USD 2 billion.
The deficit position covers 0.1 percent of gross domestic product (GDP) or lower than the previous quarter which was 0.3 percent of GDP due to an increase in the trade surplus of goods.
Meanwhile, the trade balance surplus in goods has increased, mainly contributed by the increase in the non-oil and gas trade balance surplus.
Ibrahim said that basically, CAD is a measurement of a country's trade in which the value of imported goods and services exceeds the value of exported products.
"In this case, there has been an increase in the surplus of non-oil and gas trade balance due to the decline in non-oil and gas exports in line with the slowdown in the global economy and commodity prices while non-oil and gas imports have fallen deeper, especially in the raw and auxiliary materials group," he said.
Ibrahim said that direct investment still posted a surplus as a reflection of investor's positive perception of the economic outlook and a maintained domestic investment climate.
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According to him, portfolio investment has also increased, mainly influenced by foreign capital inflows on domestic debt securities.
The performance of the Indonesia Payment Balance (NPI) in the first quarter of 2025 recorded a deficit of US$0.8 billion and the position of foreign exchange reserves at the end of March 2025 was recorded to remain high at US$157.1 billion or equivalent to financing 6.5 months of imports and payment of government foreign debt, and was above the international adequacy standard of around 3 months of imports.
Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, May 23, 2025, in the price range of IDR 16,240 - IDR 16,330 per US dollar.
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