Rupiah Potentially Weakens To Rp16,370 Per US Dollar Amid Global Concerns

Rupiah (photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, June 4 is expected to move lower against the United States (US) dollar.

To note, citing Bloomberg, on Tuesday, June 3, the rupiah spot exchange rate closed down 0.34 percent to the level of Rp. 16,308 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.05 percent to a price level of Rp. 16,288 per US dollar.

Currency observer Ibrahim Assuaibi said the US Treasury and the dollar were hit hard by concerns over the increasing level of US debt, while the focus was also on the controversial tax cuts bill backed by US President Donald Trump, who recently made progress in Congress.

In addition, Iran expressed its readiness to reject the United States' proposal to end the decades-long nuclear dispute because the proposal did not accommodate Tehran's interests and did not reflect Washington's sluggish attitude towards uranium enrichment programs.

"The potential failure in US-Iran negotiations could also be a bad sign for geopoliticals in the Middle East, given reports in May that Israel plans to attack Iran if negotiations with the US fail," he said in a statement, quoted Wednesday, June 4.

Ibrahim added that in Asia, PMI Caixin data showed an unexpected and deep contraction in the Chinese manufacturing sector in May. This figure comes a few days after PMI data showed a similar trend.

According to him, PMI figures further underscore the impact of the US trade war on China's economy, sparking fears that commodity demand in the country will weaken.

Meanwhile, from within the country, Ibrahim said that Indonesia was hit by deflation by 0.37 percent in May 2025 on a monthly basis (month to month/mtm) and became the third deflation throughout the year after January (-0.76 percent) and February (-0.48 percent).

According to him, this deflation is a danger alarm for the Indonesian economy and economic growth in the second quarter of 2025 is projected to return to less than 5 percent, so this is already a yellow light, as there are symptoms of economic growth slowing down in the second quarter of 2025.

He conveyed that prolonged deflation indicates that most people are holding back spending, this makes the economy in the future more challenging.

"This means that the population is large, but most people are resistant to spending. Slow household consumption means that the economy in the future is more challenging," he said.

In addition, Indonesia's trade balance surplus in April 2025 reached 0.16 billion US dollars or 160 million US dollars and this surplus performance was recorded to be running low when compared to the previous month which recorded a surplus of 4.33 billion US dollars.

Meanwhile, Indonesia's trade balance has recorded a surplus for 60 consecutive months since May 2020.

On the other hand, this trade balance surplus is more supported by non-oil and gas (oil and gas) commodities reaching USD 1.51 billion, but lower than the previous month which reached USD 6 billion.

The main contributors to the trade balance surplus of non-oil and gas commodities are mineral fuels, animal/drug fats and oils, as well as iron and steel.

In addition, the trade balance of oil and gas commodities recorded a deficit of 1.35 billion US dollars, with a deficit dropping from the previous month which reached a deficit of 1.67 billion US dollars.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on Wednesday, June 4, 2025, in the price range of IDR 16,300 - IDR 16,370 per US dollar.