The Rupiah Is Projected To Weaken To Rp16,280 Per US Dollar Due To The Fed's Interest Rate Uncertainty

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Tuesday, July 8 is expected to move lower against the United States (US) dollar.

To note, citing Bloomberg, on Monday, July 7, the rupiah spot exchange rate closed down 0.34 percent to the level of Rp. 16,240 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.20 percent to a price level of Rp. 16,237 per US dollar.

Currency observer Ibrahim Assuaibi said US President Donald Trump would start sending letters to countries on Friday, ahead of July 9 deadline and announced that some of the tariffs imposed would be in the range of 10 percent to 70 percent and would take effect on August 1.

In addition, Ibrahim said that Trump would also impose an additional 10 percent tariff on countries favoring the BRICS bloc over practices suspected of being anti-American.

"Previously on the weekend, Trump said the US was close to reaching several trade agreements, with new tariffs coming into effect on August 1. In April, Trump imposed a 10 percent base rate on most countries, with additional duties reaching up to 50 percent," he said in his statement, quoted Tuesday, July 8.

Ibrahim added that the three-week extension gave other countries more time to reach an agreement with the US, but the lack of details left investors worried.

According to him, the dollar's biggest support point is a sharp drop in expectations that the Federal Reserve will cut interest rates at the next two meetings, mainly driven by a strong readout of payroll on Thursday, which shows the labor market remains resilient despite other economic barriers.

"The traders were seen largely removing the stakes for the July rate cut by the Fed, and also seen raising the stakes that the Fed would last in September, the CME Fedwatch showed. This week the focus of the market is only on the release of the latest Federal Open Market Committee (FOMC) meeting minutes that will be released," he said.

Meanwhile, from within the country, Ibrahim said that Bank Indonesia (BI) recorded that Indonesia's Foreign Exchange Reserve position at the end of June 2025 reached 152.6 billion US dollars, an increase compared to the position at the end of May 2025 of 152.5 billion US dollars.

The increase in the position of foreign exchange reserves, among others, came from tax and service revenues as well as the issuance of global government bonds, amid the policy of stabilizing the Rupiah exchange rate in response to Bank Indonesia in dealing with the uncertainty of the global financial market that remains high.

The position of foreign exchange reserves at the end of June 2025 is equivalent to financing 6.4 months of imports or 6.2 months of imports and payment of government foreign debt, and is above the international adequacy standard of about 3 months of imports.

BI assesses that foreign exchange reserves are able to support the resilience of the external sector and maintain macroeconomic and financial system stability. Bank Indonesia continues to increase synergies with the Government in strengthening external resilience in order to maintain economic stability to support sustainable economic growth.

In the future, BI views that the position of foreign exchange reserves is adequate to support the resilience of the external sector in line with the prospect of maintaining exports, the balance of capital and financial transactions that are predicted to continue to record a surplus, as well as a positive perception of investors regarding domestic economic prospects and attractive investment returns.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, July 8, 2025, in the price range of IDR 16,230 - IDR 16,280 per US dollar.