Rupiah Projected Weakening Ahead Of Fed's Decision

Rupiah (Photo: antara)

JAKARTA - The rupiah exchange rate in trading Tuesday, December 9, 2025 is predicted to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Monday, December 8, the rupiah spot exchange closed down 0.28 percent to the level of Rp. 16,695 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed lower by 0.20 percent at a price level of Rp. 16,688 per US dollar.

Money market observer Ibrahim Assuaibi explained that the market is currently influenced by strong expectations that the US central bank, the Federal Reserve, will lower interest rates on weekends.

He conveyed a number of signs of a slowdown in the US economy, including weakened labor data, increasing the chances of cutting interest rates by 25 basis points to around 85 percent, raising hopes that lower loan costs will boost global growth and equity markets.

However, Ibrahim expressed that this optimism was still overshadowed by a cautious attitude because several Fed officials assessed that cutting interest rates in December could not be ascertained.

"Chairman of the Federal Reserve Jerome Powell previously stressed that the decision to come is not a certainty, far from that, making investors wary of the potential hawkish surprise," he said in his statement, quoted Tuesday, December 9.

Meanwhile, from within the country, the economic indicator shows the resilience of domestic activity towards the end of 2025, which is reflected in the manufacturing Purchasing Managers' Index (PMI) remaining in an expansionary area at the level of 53.3, while stable inflation at 2.7 percent provided space for economic recovery the following year.

According to him, the combination of the two is the initial signal that the Indonesian economy remains resilient entering 2026.

A number of other indicators also recorded improvements, such as the consumer confidence index which reached its highest point in the last five months and national economic resilience throughout 2025, which was also supported by accommodative fiscal and monetary policy.

Meanwhile, this is reflected in economic growth in the third quarter of 2025 of 5.04 percent, as well as low inflation that maintains people's purchasing power.

In addition, Bank Indonesia now has a new mandate to strengthen the real sector through various policies.

Meanwhile, the Financial Sector Development and Strengthening Law (UU P2SK) has assigned BI to formulate a policy mix that is able to create a conducive economic condition for the growth of the real sector and job creation.

Ibrahim explained in Article 7 of the P2SK Law that BI is responsible for maintaining rupiah stability, payment systems, and financial stability to support sustainable economic growth.

"To achieve this goal, BI mixes policies that are directed to create a conducive economic climate for the growth of the real sector and job creation," he explained.

He conveyed that with this basis, economic growth in 2026 is predicted to be better than 2025 supported by household consumption, increased investment, and more expansive fiscal policies.

"Government and BI strategic programs are expected to have a chain effect, especially on the manufacturing sector, manufacturing industry, and labor-intensive sectors," he explained.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, December 9, 2025, in the price range of IDR 16,690 - IDR 16,730 per US dollar.