Rupiah Predicted Weakening, Market Waits For The Fed's Interest Rate Cut Signal

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Wednesday, November 26, 2025 is predicted to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Tuesday, November 25, the rupiah spot exchange closed higher by 0.25 percent to the level of Rp. 16,657 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of Bank Indonesia (BI) closed up 0.25 percent at a price level of IDR 16,667 per US dollar.

Money market observer Ibrahim Assuaibi said that market participants are increasingly confident that the Federal Reserve (The Fed) will cut interest rates at the December meeting in line with the continued entry of the latest economic data from the US.

"This can be seen from the dovish comments of Federal Reserve officials who increased the possibility of lowering interest rates by 25 basis points (bps) at a December meeting," he said in his statement, quoted Wednesday, November 26.

He explained that the latest comments came from the Governor of The Fed, Christopher Waller, who expressed support for the cut in interest rates. This stance is in line with the statement by The Fed New York President John Williams, on Friday, who assessed that easing policies in December were possible due to labor markets showing weakening.

According to the CME FedWatch, the market now considers the opportunity to cut interest rates to nearly 80 percent, a significant increase from 30 percent before the officials' comments.

Ibrahim added that market participants are also waiting for the release of US economic data to get further signals regarding the direction of monetary policy.

The Manufacturer Price Index (IHP) is estimated to increase by 0.3 percent on a monthly basis (MoM) in September, while Retail Sales are projected to grow by 0.4 percent (MOM).

Meanwhile, from within the country, President Prabowo Subianto expressed his hope that the State Revenue and Expenditure Budget (APBN) could achieve a balanced condition or even a surplus in 2027 or 2028.

The statement was made in a financial note at the MPR Annual Session, August 15, 2025.

The government previously targeted the 2026 State Budget deficit to be at the level of 2.48 percent of gross domestic product (GDP).

However, the Ministry of Finance in September 2025 increased the projected deficit to 2.68 percent, which was then approved by the DPR through the ratification of the 2026 State Budget Law.

The increase in this deficit occurred because the government continued to continue a number of priority programs such as free nutritious meals and red and white village cooperatives, which required a large budget.

The magnitude of state spending is not balanced with the recovery of state revenues.

Revenue of taxes again did not reach the target, with the tax to GDP ratio dropping from 10.39 percent in 2022 to 10.31 percent in 2023, and falling again to 10.08 percent in 2024.

To close the deficit, the government plans to issue additional debt securities.

Meski demikian, defisit 2,68 persen masih berada dalam batas maksimal 3 persen sesuai UU Keuangan Negara, aturan tersebut tetap membuka kemungkinan penetapan defisit di atas ambang tersebut dalam kondisi tertentu.

Ibrahim memperkirakan rupiah akan bergerak fluktuatif namun ditutup melemah pada perdagangan Rabu, 26 November 2025 dalam rentang harga Rp16.650-Rp16.700 per dolar AS.

However, the 2.68 percent deficit is still within a maximum limit of 3 percent according to the State Financial Law, this rule still opens up the possibility of determining the deficit above that threshold under certain conditions.

Ibrahim estimates that the rupiah will fluctuate but closed lower in trading on Wednesday, November 26, 2025, in the price range of IDR 16,650-IDR 16,700 per US dollar.