Rupiah Projected Weakening To Rp16,360 Per US Dollar Impact Of Global Uncertainty

Rupiah (photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, July 23 is expected to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Tuesday, July 22, the rupiah spot exchange rate was closed slightly up 0.02 percent to the level of Rp. 16,320 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.14 percent to a price level of Rp. 16,307 per US dollar.

Currency observer Ibrahim Assuaibi said that ahead of the US tariff deadline which will take effect on August 1, the prospect of an agreement between the European Union (EU) and the United States (US) is fading.

"The ongoing negotiations between the European Union and the US have failed to reach meaningful progress over the past few weeks," he said in a statement, quoted Wednesday, July 23.

In addition, US President Donald Trump has threatened to impose a 30 percent tariff on most imported goods from EU block member countries in an effort to reduce the current trade deficit.

Meanwhile, the European Union is preparing to face the worst-case scenario by threatening to retaliate against US rates if an agreement is not reached.

On the other hand, Ibrahim expressed concern about the Fed's increasing independence after House of Representatives member Anna Paulina Luna (R-Fla.) officially reported Jerome Powell's chairman to the Department of Justice (DOJ) on criminal charges, accusing him of lying under oath in two testimonies before Congress over the renovation of the Fed's $22.5 billion headquarters.

"Although the legal consequences are still uncertain, political pressure has sparked investor concerns and has added new uncertainty to the fragile market sentiment," he said.

According to him, the market continues to grapple with mixed signals from some Fed officials about the potential for lower interest rates in July.

He added that the probability suggests the Federal Reserve will maintain its current interest rates, with a 97 percent chance of maintaining interest rates and 3 percent for lowering interest rates by 25 basis points at its meeting on July 30.

"Today's market focus is the opening address of Fed Chair Jerome Powell at an event hosted by the Federal Reserve and data onrocket manufacturing activities," he said.

Meanwhile, from within the country, Ibrahim said that the global economic condition in 2026 was still difficult to predict, seeing the picture of economic growth in 2026 which was greatly influenced by external and internal conditions. Therefore, Bank Indonesia tends to be more careful making the estimated economic growth in 2026 in the range of 4.70 percent-5.50 percent.

He explained that the slowdown in the world economy, particularly in major trading partner countries such as the US and China, had an impact on the performance of national exports.

According to him, the government also needs to consider taking countercyclical policy steps to reduce the impact of economic fluctuations.

"It encourages government spending to be more productive and provides stimulus that is right on target for the poor, vulnerable, especially for the middle class," he said.

Ibrahim added that policy steps provide fiscal stimulus for the transportation sector, social assistance, wage subsidies, toll road incentives, and additional rice food assistance.

He explained that the incentives for the transportation sector and toll rates target middle class groups so that mobility is higher during school holidays.

Ibrahim conveyed that while social assistance, wage subsidies, and food assistance were more focused on vulnerable and poor groups so that they could survive in the midst of weakening the national economy.

"Similarly from the monetary side, policies that are expansive in nature through relaxation of the benchmark interest rate, BI rate. This policy is carried out to reduce credit interest rates, which in turn are expected to increase credit demand, both for investment and consumption," he said.

According to Ibrahim, BI's expansionary monetary policy is in line with the low trend of inflation.

He added that the Government and BI must realize that, for now, countercyclical policy fiscal and monetary policy is not strong enough to encourage national economic growth.

"However, it is more likely to contain the pace of the national economic slowdown, so that growth is maintained in the range of 5.0 percent," he said.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on Wednesday, July 23, 2025, in the price range of Rp. 16,310 - Rp. 16,360 per US dollar.