Rupiah Expected to Remain Stable After Eid Holiday Despite Weakening Pressure

Redaksi Selasa, April 08, 2025 Comment

Rupiah Expected to Remain Stable After Eid Holiday Despite Weakening Pressure.

JAKARTA – The Indonesian rupiah is projected to stay relatively stable against the US dollar, even though there's a tendency for it to weaken following the long Eid al-Fitr holiday.

According to CNBC Indonesia Research, citing Refinitiv data, the rupiah has often closed lower in the first trading days after the Eid break over the past ten years.

Out of those ten years, the rupiah only strengthened three times — in 2016, 2019, and 2023. The rest saw a decline, including a sharp drop of over 2% on April 16, 2024.

Trump’s Tariff Decision Adds Pressure

Tuesday, April 8, 2025, marks the first trading day after the 11-day Eid holiday. Investors are watching the market closely, especially after a significant move last week by US President Donald Trump.

He announced reciprocal tariffs on several trade partners — including a hefty 32% tariff on Indonesian goods.

This move has sparked global uncertainty and escalated trade tensions. The impact on Indonesia could be serious — foreign investors may start pulling out, and demand for Indonesian exports in the US could drop due to higher prices.

If this continues, Indonesia’s US dollar supply could shrink, adding more pressure on the rupiah.

Market Outlook and Projections

Despite the challenges, there are still signs of optimism. Mega Capital Sekuritas (MCS) noted that while the rupiah faced strong depreciation pressure in overseas forward markets, things have improved slightly thanks to a drop in the US Dollar Index (DXY), which stood at 103.02 as of April 4, 2025.

MCS expects the rupiah to stay under control on Tuesday, likely ranging between IDR 16,500 to 16,600 per US dollar.

Maybank Indonesia’s Global Markets Economist, Myrdal Gunarto, also warned that the rupiah could rise above IDR 16,700/USD. However, he emphasized that the situation isn’t comparable to the 1998 crisis.

Indonesia’s economy is much stronger now, supported by key export sectors like coal and other commodities, which actually benefit when the dollar strengthens.

Plus, since many of Indonesia’s imports come from countries like China and those in ASEAN — whose currencies are also weakening — the impact on import prices might be limited.

Bank Indonesia’s Possible Intervention

Senior economist Fithra Faisal Hastiadi from Samuel Sekuritas suggested a strategic monetary intervention by Bank Indonesia (BI) to stabilize the rupiah.

He proposed injecting foreign exchange reserves to push the exchange rate back to IDR 16,400/USD.

According to his analysis, every $1 billion injected could strengthen the rupiah by around 100 points, especially in the early days after a shock.

He recommended a two-phase approach: a $2–3 billion injection in April, followed by a second phase in May depending on market conditions.

Long-Term Solutions: Strengthening the Domestic Market

Enrico Tanuwidjaja, an ASEAN economist from UOB, advised the government to focus on circular economic strategies.

These include boosting the domestic market, reducing import dependence, and deepening Indonesia’s financial market to create a more resilient economy.

He forecasts that by the end of Q3 2025, the rupiah could reach IDR 17,200/USD — underlining the importance of proactive policy steps.

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