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THE RUPIAH exchange rate continued to fall, hitting IDR16,596 per US dollar on Friday (2/28), its worst record since 1998. Concerns over good governance and US tariff policy have put pressure on the rupiah.
In one week, the rupiah depreciated by 1.7% in the spot market and corrected by 1.75% throughout February 2025. As a result, the rupiah became the most depreciated currency in Asia in February 2025.
According to Doo Financial Futures analyst Lukman Leong said the rupiah was pressured by foreign outflows in the domestic stock market in response to Morgan Stanley’s downgrade of Indonesia’s MSCI equity rating. The rupiah’s weakness was also exacerbated by the strengthening of the U.S. dollar on trade war concerns.
“Trump confirmed that the Canadian and Mexican tariffs will continue to start on March 3, 2025, as well as an additional 10 percent tariff on China and a 25% global tariff on aluminum and steel,” he told Kontan.co.id on Friday (02/28), 2025.
Meanwhile Senior Economist KB Valbury Sekuritas, Fikri C. Permana added that investors also have concerns about Indonesian governance, given the increasing cases of corruption that have occurred. Just look at the presence of Danantara and Bullion Bank has not been able to keep foreign investors’ money, especially in the stock market.
“Both have positive goals, but there may be concerns about their implementation,” he said.
In addition, the release of durable goods data, which came in above expectations, drove the dollar index higher. As a result, it also put pressure on the rupiah’s movement. The pressure on the Rupiah is expected to continue in the early part of next week. GCG sentiment and tariffs are still quite strong, overshadowing the movement of the rupiah.
In addition, Indonesian inflation data will be released early next week. Lukman estimates that annual inflation will still fall to 0.5% and monthly inflation to only 0.2%. Indonesia’s foreign exchange reserves are also estimated to be stable at around US$156 billion.
“Although investors are still waiting for tonight’s US PCE inflation data, it will not ease the current negative sentiment,” he continued.
Lukman estimated the rupiah to be in the range of IDR16,450-IDR16,600 per US dollar on Monday (03/3), 2025. Then Fikri estimated the rupiah in the range of IDR16,500-IDR16,600 per US dollar. [kontan.co.id]/photo special]
