Today's Rupiah Is Predicted To Weaken Driven By US Trade War Concerns

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, February 7, 2025 is expected to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Thursday, February 6, 2025, the rupiah spot exchange closed down 0.30 percent to the level of Rp. 16,341 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.13 percent to a price level of Rp. 16,330 per US dollar.

Currency Observer Ibrahim Assuaibi said traders remain vigilant against the ongoing trade war between the US and China after Washington imposed new trade rates on Beijing.

"The sentiment towards China has been hit by US President Donald Trump, who charges a trade rate of 10 percent against the country," he said in his statement, quoted Friday, February 7.

Ibrahim said China retaliated at its own tariffs and export controls, potentially marking the start of a new trade war between the world's largest economies.

The US-Chinese trade war has the potential to increase further, and its expectations that Trump will follow up at a 60 percent rate on China.

Ibrahim said the focus this week is on the main data on US non-farm payroll that will be released on Friday, for further signalling on interest rates. any sign of resilience in the labor market could support the US dollar.

Meanwhile, from within the country, economic growth has continued to slow down in the last two years. Economists believe that the government's impartiality towards the middle class is the main cause. For information, Indonesia's economic growth in 2022 was recorded at 5.31 percent, while in 2023 it was 5.05 percent.

Then, last year, although still at the level of 5 percent, it slowed to 5.03 percent. So far, household consumption has often become the largest component forming gross domestic product (GDP). For example, in 2024, household consumption distribution will reach 54.04 percent of economic growth.

Historically, the Central Statistics Agency (BPS) noted that household consumption growth has never been more than 5 percent since 2020. During that time, household consumption growth has often been below overall economic growth.

Lately, the life burden of the middle class is getting bigger. The problem is, the middle class is a community group that contributes the most to the growth of household consumption. For example, during 2024, many middle class necessities/services continue to increase in price, such as transportation for holidays to pulses/packages of data.

The government has so far seemed to only focus on issuing policies that favor the lower classes, such as through social assistance (bansos). Meanwhile, the middle class is burdened with various tax levies and the like. Therefore, it is not surprising that household consumption cannot grow higher than the overall economic growth.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Friday, February 7, 2025, in the price range of IDR 16,310 - IDR 16,400 per US dollar.