The Rupiah Is Projected To Weaken Due To The Fed's Interest Rate Uncertainty

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Thursday, July 3 is expected to move lower against the United States (US) dollar.

To note, citing Bloomberg, on Wednesday, July 2, the rupiah spot exchange closed down 0.29 percent to the level of Rp. 16,247 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.27 percent to a price level of Rp. 16,236 per US dollar.

Currency observer Ibrahim Assuaibi said amid growing bets that the Fed would cut interest rates in September.

"Minister of Finance Scott Bessent said that he saw such a scenario, however, Fed Chair Jerome Powell mostly reiterated the central bank's cautious stance on Tuesday, stating that uncertainty over the impact of inflation from Trump rates would prevent the central bank from cutting interest rates in the near future," he said in a statement, quoted Thursday, July 3.

Ibrahim added that uncertainty over fiscal implications of Trump-backed tax and spending cutting bills, which were approved in the Senate vote and the bill will now be brought back to the House of Representatives for the final vote.

"The latest analysis shows the bill could increase the government's debt to 3.3 trillion US dollars over the next decade," he said.

Meanwhile, from within the country, Ibrahim conveyed that the government's debt position at the end of the 2024 budget reached Rp. 10,269 trillion, although it reflected the amount of state obligations, the government balance as of December 31, 2024, reflected a solid financial position, with total assets of Rp. 13,692.4 trillion, liabilities of Rp. 10,269.0 trillion, and equity of Rp. 3,423.4 trillion.

Meanwhile, the state equity position of IDR 3,423.4 trillion is an illustration of the country's net worth and fiscal power in dealing with global uncertainty and risks that are still high.

Meanwhile, the More Budget Balance (SAL) as of the end of 2024 was recorded at IDR 457.5 trillion. This number decreased slightly from the initial position of the year of IDR 459.5 trillion.

Ibrahim said the decline occurred in line with the use of SAL for APBN financing and the SAL level was still adequate, where the SAL budget post served as a fiscal buffer in dealing with various risks and uncertainties in the future.

Meanwhile, he conveyed that the cash flow of investment activities recorded negative values of investment activities reflecting the government's commitment to continue to make productive investments to encourage the acceleration of national development.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Thursday, July 3, 2025 in the price range of IDR 16,230 - IDR 16,300 per US dollar.