The Rupiah Is Predicted To Strengthen To Rp16,310 Because The US Trade War Subsides

Illustration (Photo: Doc. ANTARA)

JAKARTA - The rupiah exchange rate in trading Thursday, February 6, 2025 is expected to move higher against the United States (US) dollar.

To note, citing Bloomberg, on Wednesday, February 5, 2025, the rupiah spot exchange closed up 0.36 percent to the level of Rp. 16,293 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed higher by 0.34 percent to a price level of Rp. 16,308 per US dollar.

Currency Observer Ibrahim Assuaibi expressed concern that the protracted global trade war had eased slightly following Trump's last-minute deal with Canada and Mexico.

"Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum agreed to step up border law enforcement efforts in response to the US president's request to take firm action against immigration and drug smuggling, leading to a 25 percent tariff suspension for 30 days," he said in his statement, quoted Thursday, February 6.

Ibrahim said the Chinese market reacted to US trade tensions The Chinese market continued trading after a week-long Chinese New Year holiday, when Trump charged a 10 percent tariff on Chinese imports.

Meanwhile, China has announced a return fee for US goods, including a 15 percent levy of coal and liquefied natural gas, and a 10 percent tariff on crude oil, agricultural equipment, and certain vehicles.

"This tariff will take effect on February 10, 2025. Although there is hope for a high-level discussion to defuse the situation, President Trump has stated that he is not in a hurry to talk to Chinese President Xi Jinping," he said.

Ibrahim expressed this attitude indicating that an increasing resolution to trade conflicts may not occur soon, thus making markets and businesses unsure about the future of US-Chingkok economic relations.

According to him, rising trade tensions have raised concerns about the potential for a full-scale trade war between the world's two largest economies.

Meanwhile, from within the country, Indonesia's economy throughout 2024 grew by 5.03 percent year on year (yoy) while in the fourth quarter of 2024 Indonesia's economy grew by 5.02 percent.

The economic growth throughout 2024 is mainly supported by household consumption.

This figure reflects slower growth rates than previous expectations.

In addition to household consumption, economic growth throughout 2024 was also contributed by the Gross Fixed Capital Formation (PMTB) of 1.43 percent, and government consumption of 0.48 percent.

All business fields throughout 2024 recorded positive growth in 2024.

For business fields that make a major contribution to economic growth, namely the manufacturing, trade, agriculture, construction, and mining industries.

The driving force for the growth of this business field was triggered by increased community mobility, increasing the number of domestic tourist trips, increasing the number of foreign tourist visits, and increasing other economic activities.

Ibrahim said Indonesia entered 2025 with increasingly severe economic challenges. This trend is not without reason.

The slowdown began in the third quarter of 2024, with growth reaching only 4.95 percent yoy, lower than the previous two quarters which were still above 5 percent.

"People's purchasing power is decreasing, the middle class is getting eroded, while sectoral productivity continues to decline," he said.

Seasonal factors, such as homecoming periods and school holidays, did support economic growth in early 2024, but once that phase ended, many sectors actually slowed down drastically.

According to him, without seasonal factors, only six of the 17 economic sectors experienced acceleration in the third quarter of 2024.

This situation further makes it clear that the national economic problem is more structural.

Ibrahim estimates that the rupiah will fluctuate but close higher in trading Thursday, February 6, 2025 in the price range of IDR 16,250 - IDR 16,310 per US dollar.