The Rupiah Is Predicted To Strengthen To IDR 16,350 Per US Dollar Amid The Weakening Of US Workers

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Tuesday, August 5 is expected to move higher against the United States (US) dollar.

To note, citing Bloomberg, on Monday, August 4, the rupiah spot exchange closed slightly up 0.68 percent to the level of Rp. 16,401 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.64 percent to a price level of Rp. 16,388 per US dollar.

Currency observer Ibrahim Assuaibi said that the market began taking into account the possibility of lowering interest rates by the Federal Reserve (The Fed) following the release of US labor data in July which weakened.

"Although the Unemployment Rate has barely changed, the weakening in the labor market justifies the attitude of Fed Governor Michelle totaling and Christopher Waller, which supported a 25-base point (bps) reduction in interest rates at the Fed 29-30 last July," he said in his statement, quoted Tuesday, August 5.

In addition, Ibrahim conveyed that the July Nonfarm Payrolls (NFP) data only recorded an additional 73,000 jobs, far below market expectations of 110,000.

In addition, the previous month's figure was also revised to decline significantly, from 147,000 to only 14,000 jobs, showing a deeper labor market slowdown than previously thought.

"The unemployment rate in July rose slightly to 4.2 percent from 4.1 percent in June, in line with market expectations," he said.

Ibrahim also highlighted that President Trump's policy of continuing to apply high import rates to a number of countries such as Canada, Brazil, India, and Taiwan also sparked concerns about global inflation and potential disruptions to international trade flows.

Meanwhile, from within the country, Ibrahim conveyed that the trend of core component inflation which illustrates people's purchasing power has been monitored sloping since May 2025 on an annual basis or year on year (YOY).

Based on data from the Central Statistics Agency (BPS), core inflation in July 2025 was recorded at 2.32 percent (YoY), down from 2.37 percent in June and 2.40 percent in May. On a monthly basis (month-to-month/MtM), core inflation rose slightly from 0.07 percent in June to 0.13 percent in July.

One of the biggest contributors to core inflation is the gold jewelery commodity which contributed 0.46 percent to general inflation which reached 2.37 percent (YoY) in July 2025.

According to Ibrahim, although core inflation is sloping, the consumer price index (JCI) on this component still shows inflationary pressure, although not as big as the previous month.

Ibrahim added that this was influenced by price fluctuations between goods and goods in the core inflation group, as well as the contribution of gold prices which were still quite dominant.

Meanwhile, general inflation experienced a significant increase, from 1.87 percent (YoY) in June to 2.37 percent in July.

Meanwhile, this inflationary pressure mainly comes from a surge in food prices, as reflected in inflation in volatile food components that jumped to 3.82 percent (YoY) and 3.42 percent year-to-date (YTD). In comparison, inflation in food prices volatile in the previous month was only 0.10 percent (YoY).

Ibrahim estimates that the rupiah will fluctuate but close higher in trading on Tuesday, August 5, 2025, in the price range of IDR 16,350 - IDR 16,400 per US dollar.