The Rupiah Is Predicted To Strengthen To IDR 16,520 Per US Dollar, Supported By The Fed's Dovish Signal

US and Rupiah dollars (Photo: dock. Antara)

JAKARTA - The rupiah exchange rate in trading Thursday, October 16 is expected to move higher against the United States (US) dollar.

To note, citing Bloomberg, on Wednesday, October 15, the rupiah spot exchange closed higher by 0.16 percent to the level of Rp. 16,576 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed stagnantly at a price level of Rp. 16,577 per US dollar.

Currency observer Ibrahim Assuaibi delivered a statement by Federal Reserve Chairman Jerome Powell interpreted by investors as a sign of dovish.

"Powell said the US economy may be on a stronger track than some thought, but he warned that a much weaker labor market was emerging," he said in a statement, quoted Thursday, October 16.

In addition, Powell also explained that there is no risk-free path to policy and stressed that future decisions will be met by-meetings.

According to Ibrahim, the comments strengthened market expectations against the Fed's potential lower rates in October and December, which will lower US government bond yields and weaken the dollar.

Meanwhile, US President Donald Trump has threatened to impose a 100 percent tariff on China, sparking strong criticism from Beijing, warning that it is ready to go to war in any form, sparking trade tensions between the two world's largest economies.

Meanwhile, from within the country, Ibrahim said that the Government opens opportunities to cut the Value Added Tax (VAT) rate next year.

He said that this option was a consideration in order to maintain people's purchasing power. However, the option to reduce VAT rates needs to be studied more deeply.

"The study will be carried out very carefully, because it needs to know more clearly the condition of state revenue, at least until the end of 2025," he explained.

Meanwhile, the VAT rate actually experienced a gradual increase where at the beginning of this year, the government raised the VAT rate to 12 percent, from 11 percent, according to the Law (UU) on Harmonization of Tax Regulations (HPP).

However, President Prabowo Subianto decided that the VAT rate would remain 11 percent without changing the rules in the HPP Law. This is done by implementing another value of the Tax Imposition Basic (DPP) scheme 11/12 of the selling price. The government also only applied an increase in tariffs from 11 percent to 12 percent for sales tax on luxury goods (PPnBM).

The regulation is stated in the Minister of Finance Regulation (PMK) Number 131 of 2024. A number of luxury goods or services in question include luxury housing such as houses, apartments, condominiums and town houses at a selling price of IDR 30 billion or more.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Thursday, October 16, 2025 in the price range of IDR 16,520 - IDR 16,580 per US dollar.