Rupiah Potentially Strengthens To Rp16,230 Per US Dollar Supported Expectations For Fed Rate Reduction

Rupiah and US Dollars (Photo: Antara)

JAKARTA - The rupiah exchange rate in trading Friday, August 8 is expected to move higher against the United States (US) dollar.

To note, citing Bloomberg, on Thursday, August 7, the rupiah spot exchange closed up 0.46 percent to the level of Rp. 16,287 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.41 percent to a price level of Rp. 16,312 per US dollar.

Currency observer Ibrahim Assuaibi said that US President Donald Trump would charge a 100 percent tariff on import semiconductors from certain countries except for investing in American chip manufacturing.

"This policy aims to increase domestic production but has sparked fears of further disruption to global supply chains and higher inflation," he said in a statement, quoted Friday, August 8.

In addition, Ibrahim said Trump also signed orders, doubling US rates for imports from India to 50 percent, citing the country's purchase of Russian oil.

As for a post on Truth Social, Trump said reciprocal rates will take effect at midnight, keeping investors alert.

Ibrahim added that the market is increasing the Fed's interest rate drop in September from expectations that the Federal Reserve may start cutting interest rates as early as September, after data released this week showed the US services sector slowed down in July, following data on non-farm payroll that disappointed last week.

"However, the decline that occurred in the US dollar index was due to expectations that the Federal Reserve would cut interest rates at a September meeting remained at around 92 percent, according to the CME FedWatch Tool," he said.

Ibrahim said lower interest rates reduced the cost of holding assets that did not provide yields such as gold and a recent speech from Fed policymakers showed that the central bank tends to cut interest rates, but uncertainty remains due to fears of tariff-driven inflation.

Meanwhile, from within the country, Ibrahim said that Bank Indonesia (BI) reported that Indonesia's foreign exchange reserves had decreased, at the end of July 2025 Indonesia's foreign exchange reserves of 152.0 billion US dollars, slightly decreased from the position at the end of June 2025 which amounted to 152.6 billion US dollars.

These developments were influenced, among others, by the payment of government foreign debt and the policy of stabilizing the rupiah exchange rate.

Meanwhile, this step is BI's response in dealing with the uncertainty of the global financial market which is still high.

The position of foreign exchange reserves at the end of July 2025 is equivalent to financing 6.3 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.

In addition, BI assesses that the foreign exchange reserves are able to support the resilience of the external sector and maintain macroeconomic and financial system stability.

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

Bank Indonesia continues to increase synergy with the Government in strengthening external resilience in order to maintain economic stability to support sustainable economic growth.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Friday, August 8, 2025 in the price range of IDR 16,230 - IDR 16,290 per US dollar.