The Rupiah Is Predicted To Weaken Amid The Fed's Fraction Of Interest Rates

Illustration. (Photo: Doc. Antara)

JAKARTA - The rupiah exchange rate in trading Friday, December 12, 2025 is predicted to weaken against the United States (US) dollar.

To note, citing Bloomberg, on Thursday, December 11, the rupiah spot exchange closed up 0.07 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 up 0.12 percent at a price level of Rp. 16,668 per US dollar.

Money market observer Ibrahim Assuaibi explained that in a December meeting, the Fed lowered interest rates to around 3.50 percent'3.75 percent, according to market expectations and this is the lowest level in the last three years.

"The vote of the Federal Open Market Committee (FOMC) is 9-3, with Governor Miran choosing a 50 bps cut, while Jeffrey Schmid and Austan Goolsbee choose to keep interest rates unchanged," he said in his statement, quoted Friday, December 12.

Meanwhile, the Economic Projection Summary (SEP) shows the majority of Fed members estimate the federal interest rate next year to be around 3.4 percent, indicating a potential cut of 25 bps and for the long term after 2028, neutral interest rates are projected to be in the range of 3 percent.

In a press conference, Fed Chairman Jerome Powell said that it would take time to assess the impact of three times this year's interest rate cuts on the US economy and also said officials would pay attention to incoming economic data ahead of the next meeting in January.

"Today's market focus is the US Early US Unemployment Claim which will be released tonight," he explained.

Meanwhile, from within the country, the Asian Development Bank (ADB) lowered Indonesia's economic growth projection for 2025 from 5 percent to 4.9 percent, and for 2026 from 5.1 percent to 5 percent, this estimate is lower than the government's target in the state budget, which is 5.2 percent in 2025 and 5.4 percent in 2026.

Meanwhile, the revision was triggered by the high tariff imposed by the United States, which created trade uncertainty and suppressed growth prospects, and this is in line with the decline in projected growth in the ASEAN region from 4.7 percent to 4.3 percent for the 2025-2026 period.

ADB also noted that Indonesia's economic growth in the third quarter reached 5.0 percent on an annual basis, while the average growth in the first three quarters of this year was slightly above 5.0 percent.

In addition, manufacturing activity shows improvement, as reflected in the Purchasing Managers' Index (PMI) which is above 50 in the period August to October.

According to ADB, government spending is increasing thanks to the implementation of a more effective budget and distribution of stimulus. However, investment growth and household consumption began to slow down after previously strengthening.

Ibrahim estimates that the rupiah will fluctuate but close lower on trading Friday, December 12, 2025, in the price range of IDR 16,670 - IDR 16,710 per US dollar.