The Indonesian Rupiah is under pressure, recently breaching the Rp17,000 level against the U.S. dollar. This article explores the factors affecting the value of the rupiah, including global trade tensions and the response from Bank Indonesia, providing insights for those interested in currency exchange and market trends relating to the USD to IDR.
Rupiah Under Pressure: Touches Rp17,000 Amid Global Trade Tensions
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Jakarta – The Indonesian Rupiah is facing renewed pressure, breaching the Rp17,000 level against the U.S. dollar in Non-Delivering Forward (NDF) markets. This development raises concerns about potential economic impacts and the response from Bank Indonesia (BI).
Rupiah’s Performance in NDF Market
The rupiah’s exchange rate in the NDF market reached Rp17,059 per U.S. dollar at 08:10 Jakarta time, according to Refinitiv data. This represents a significant weakening compared to the closing rate of Rp16,555 per U.S. dollar in regular trading before the Eid holiday on March 27, 2025, when the rupiah strengthened by 0.12%. The NDF market frequently enough serves as an indicator of future spot market movements, suggesting potential further depreciation.
NDF, or Non-Delivering forward, is a financial instrument used to trade currencies at a predetermined exchange rate over a specific period. These markets are primarily located in international financial centers such as Singapore, Hong Kong, New York, and London, and their movements can influence psychological price formation in the spot market.
Impact of U.S. Tariff Policies
Analysts suggest that U.S. tariff policies are contributing to global economic uncertainty, impacting the rupiah. The imposition of reciprocal tariffs, perhaps reaching 32% due to the U.S. trade deficit with Indonesia, could negatively affect Indonesian exports to the U.S.
This could lead to a decrease in U.S.dollar supply and further pressure on the rupiah’s value. A decrease in Indonesian goods entering the U.S. market would occur because the price of goods entering the US will tend to be more expensive than usual.
As a result, the people in the US will tend to choose US products rather than imports from Indonesia.
Bank Indonesia’s Response
Bank Indonesia (BI) has acknowledged the potential impact of the U.S. tariff announcement and is closely monitoring market developments. Ramdan Denny Prakoso, Head of BI Communication Department, outlined the central bank’s response:
- Continuous monitoring of global and domestic financial markets following the announcement of the new U.S. tariff policy on April 2, 2025.
- Observation of dynamic market movements, including weakening global stock markets and declining U.S. Treasury yields, after the tariff announcement and subsequent retaliation by China on April 4, 2025.
BI remains committed to maintaining the stability of the rupiah exchange rate, especially through the optimization of the triple intervention instrument (interventions on the foreign exchange market on spots and DNDF transactions, as well as SBN in the secondary market) in order to ensure the adequacy of foreign exchange liquidity for the needs of banking and the business world and maintain the confidence of market players.
Ramdan Denny Prakoso, Head of BI Communication Department, Bank Indonesia
This “triple intervention instrument” is a key tool for BI to manage exchange rate volatility and ensure sufficient foreign exchange liquidity in the market.
