The Rupiah Weakens Amid The Fed's Policy Uncertainty And Increased Production Costs

Illustration (Photo: Doc. ANTARA)

JAKARTA - The rupiah exchange rate in trading Tuesday, November 4 is expected to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Monday, November 3, the rupiah spot exchange closed down 0.27 percent to the level of Rp. 16,676 per US dollar. Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed down 0.23 percent at a price level of Rp. 16,664 per US dollar.

Currency observer Ibrahim Assuaibi explained that although the Federal Reserve (The Fed) cut interest rates by 25 basis points last week, Chief of The Fed Jerome Powell's comments, which stated that further rate cuts could not be ascertained, made investor optimism ease.

"Nada kehatihannya, yang juga disuarakan oleh pejabat Fed lainnya, telah mendorong pasar untuk mengurangi ekspektasi cutan suku bunga lagi pada bulan Desember, yang membuat indeks dolar AS menahan di dekat level tertinggi tiga bulan pada hari Senin," ujarnya dalam keterangannya, dikutip Selasa, 4 November.

Meanwhile, he added that the closure of some US governments had entered its fifth week without any significant progress, after the Senate postponed the trial last Thursday.

"The senators are scheduled to return to trial on Monday, but negotiations are still stagnant even though President Donald Trump urged the Republican Party to end the filibutary to push for a funding bill," he explained.

Ibrahim added that this situation delayed the publication of a number of important US economic data and raised concerns about its impact on the economy as a whole.

Meanwhile, from within the country, Indonesia's manufacturing sector activities have continued to show expansion over the past three months where in October 2025, Indonesia's manufacturing Purchasing Managers' Index (PMI) was recorded at the level of 51.2, up from the previous month's position of 50.4.

According to a recent report by S&P Global, the figure reflects the stable condition of the industry, supported by increased production, purchasing activity, and continued employment.

Ibrahim said the increasing demand came mainly from the domestic market, while export demand actually weakened for two consecutive months due to the sluggishness of the global economy.

In terms of costs, industry players reported an acceleration of input price inflation, so that the average cost increased with the fastest rate in the last eight months, along with the increase in raw material prices.

However, he added, the production volume was recorded to be stagnant or in a neutral area, because some manufacturers chose to use the pre-existing supply of finished goods.

"However, it is undeniable that price pressure is still high, with producers recording the sharpest average cost expense increase in the last eight months, as reports of rising raw material prices," he explained.

On the other hand, he added that manufacturing companies tend to be careful in continuing to increase costs to consumers, so that selling prices only increase slightly in order to maintain competitiveness.

According to him, some manufacturers even increase production capacity to meet new demand, while others take advantage of the existing stock, which in turn makes the supply of goods slightly decrease.

Ibrahim estimates that the rupiah will fluctuate but close lower in trading on Tuesday, November 4, 2025, in the price range of IDR 16,670 - IDR 16,730 per US dollar.