External Pressures in Financial Markets Weaken Rupiah

RRI.CO.ID, Jakarta - External pressures weighed on the Indonesian rupiah at the close of trading on Tuesday, February 24, 2025. The currency weakened by 27 points, or 0.16 percent, to IDR 16,829 per USD from IDR 16,802 per USD in Jakarta.

Research and Development Indonesia Commodity and Derivatives Exchange (ICDX) analyst Taufan Dimas Hareva said the rupiah’s decline reflected persistent external pressures in financial markets. “The strengthening of the US dollar occurred along with expectations that US interest rates will remain high for longer,” Taufan said in Jakarta, as quoted by Antara.

Data from the CME FedWatch Tool, cited by Xinhua, showed that the probability of the Federal Reserve maintaining interest rates at the March 2026 Federal Open Market Committee (FOMC) meeting rose to 94 percent from around 80 percent. This increase bolstered sentiment toward the US dollar.

Several US economic indicators also showed improvement. The Dallas Fed Manufacturing Index climbed to 0.2 from minus 1.2, while the Chicago National Activity Index rose to 0.18 from minus 0.21.

“These conditions have encouraged a shift in global capital flows toward dollar-based assets and increased risk aversion toward emerging market currencies, including the rupiah,” Taufan said.

Domestically, the market is monitoring the consistency of monetary policy and the effectiveness of exchange rate stabilization measures. Taufan noted that foreign capital flows in the bond and stock markets, along with foreign exchange demand for imports and external debt payments, contributed to short-term volatility.

“Overall, strong global sentiment combined with technical domestic factors will likely cause the rupiah to fluctuate in the near future,” he said.

Meanwhile, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened to IDR 16,830 per USD from IDR 16,818 per USD. ***