Rupiah Potentially Weakens Amid Increasing Global Uncertainty

Illustration (Photo: Doc. ANTARA)

Currency observer Ibrahim Assuaibi said that the increasing uncertainty of US rates continues to be a turnover among investors, after the Wall Street Journal reported that the European Union was preparing countermeasures against US President Donald Trump's trade rates.

"This is a response to the demands of US officials over more concessions from the bloc for a potential trade deal, including a basic tariff of 15 percent, which surprised EU negotiators," he said in a statement, quoted Tuesday, July 22.

In addition, he said in the report also underlined the uncertainty over US trade policy, especially as the August 1 deadline for Trump's tariff was getting closer.

"Minister of Trade Howard Lutnick said that August 1 is a tight deadline for tariffs, which ranges from 20 percent to 50 percent of major economies," he said.

Ibrahim said investors were also waiting for news from the US about possible further sanctions, after President Donald Trump earlier this week threatened to impose sanctions on Russian export buyers unless Moscow agreed to a peace deal within 50 days. In addition, investors are cautious because US rates will take effect on August 1.

Meanwhile, from within the country, Ibrahim said that economic growth in the second quarter of 2025 was estimated not much different from the previous quarter of 4.87 percent on an annual basis, although in the second quarter there was a school holiday moment, but the impact was not as big as Ramadan and Eid.

In addition, he added, government spending is still slow and the Government has begun to open efficiency in March, but its absorption has not yet accelerated.

Then, Ibrahim said that the government did provide a stimulus, but the policy only emerged at the end of the second quarter, aka June 2025, plus not to mention the relatively limited stimulus coverage, only for middle class candidates, even though the middle class group contributed more than 50 percent of total consumption.

Household consumption in that period contributed 54.53 percent to GDP which was only able to grow 4.89 percent yoy despite Ramadan and Eid.

Meanwhile, government consumption contracted 1.38 percent and only contributed 5.88 percent to GDP.

The opening of budget blocking until June 24, 2025, has been carried out worth IDR 134.9 trillion out of a total of IDR 306.7 trillion reserved.

Evidently in the 2025 State Budget Semester I Report, the realization of state spending in that period only reached Rp1,406 trillion or 38.8 percent of the ceiling which reached Rp3,621.3 trillion.

Meanwhile, state spending is even estimated to only be disbursed by 97.4 percent or around Rp. 3,527.5 trillion by the end of the year.

Previously, the Ministry of Finance believed that after opening the budget block and coupled with the stimulus, the economy in the second quarter of 2025 could grow by more than 4.7 percent the initial estimate of fiscal authorities and the government had sought to maintain the momentum of economic growth for the second quarter of 2025.

This is done through government spending in the form of distributing fiscal stimulus, ranging from transportation discounts, Wage Subsidy Assistance (BSU), to additional food assistance, which totals IDR 24.4 trillion.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, July 22, 2025, in the price range of IDR 16,310 - IDR 16,360 per US dollar.