Rupiah Falls amid Fed Policy Uncertainty and Prolonged US Shutdown

KBRN, Jakarta: Indonesia’s rupiah slipped on Tuesday, November 4, 2025, as uncertainty over the Federal Reserve’s next policy moves and the prolonged US government shutdown weighed on market confidence, keeping the dollar firm.

The rupiah closed at IDR 16,708 per US dollar, down 32 points or 0.19 percent from the previous close of IDR 16,676. Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened to IDR 16,724 per US dollar, compared with IDR 16,664 a day earlier.

According to Ibrahim Assuabi, currency analyst and Director of Laba Forexindo Berjangka, the rupiah’s depreciation was mainly driven by diverging views among Federal Reserve officials on the pace of future rate cuts.

“Some policymakers emphasize the need for caution regarding inflation, while others highlight signs of a slowdown in the US labor market. This divergence reinforces doubts about how quickly the Fed will proceed with rate cuts, keeping the dollar strong," Ibrahim said in a written statement in Jakarta, on Tuesday, November 4, 2025, as quoted by antaranews.com.

Last week, Fed Chair Jerome Powell signaled that the central bank has not yet committed to further monetary easing, noting that a potential rate cut in December 2025 is not guaranteed. Since then, markets have scaled back expectations of a near-term rate reduction, as differing remarks from Fed officials have added to uncertainty over the US economic outlook.

Ibrahim also pointed to the ongoing US government shutdown, which has now entered its 33rd day with no sign of resolution, further pressuring the rupiah. “If the deadlock continues, it could surpass the previous record of 35 days,” he warned. ***