Indonesia's Minister of Finance, Sri Mulyani Indrawati, has emphasized that the weakening rupiah exchange rate does not reflect the country’s fundamental economic conditions.
“The exchange rate reflects global dynamics and is not always aligned with Indonesia’s economic fundamentals,” she said at a press conference on Wednesday.
The average year-to-date rupiah exchange rate stood at Rp16,443 per US dollar from January to March, while the rate at the end of March reached Rp16,829.
The government is targeting a stronger exchange rate of around Rp16,000 per US dollar, based on the macroeconomic assumptions in the 2025 State Budget.
However, Indrawati noted that global conditions are continuing to shift. For instance, markets had expected the Federal Reserve to cut its federal funds rate.
However, this expectation was hampered by persistent inflation in the United States and a tight labor market.
As a result, the Fed has become more cautious about lowering interest rates. This has led to capital inflows into the US and strengthened the US dollar index.
Global financial uncertainty has also been influenced by the US government's reciprocal tariff policies. Indrawati said the tariffs were aggressive, affecting around 70 trading partner countries that maintain a trade surplus with the US.
“This has caused exchange rate fluctuations in many countries, including Indonesia,” she added.
At opening on Wednesday morning, the rupiah appreciated by 46 points, or 0.27 percent, to Rp16,715 per US dollar, up from the previous rate of Rp16,761.
Currency and commodities analyst Lukman Leong from Doo Financial Futures estimated that the rupiah could strengthen modestly amid optimism about negotiations over the US tariff policy.
Related news: Weakening rupiah momentum for increasing exports: MPR
Related news: Rupiah under control, supported by stabilization policies: BI
Translator: Imamatul, Kenzu
Editor: Anton Santoso
Copyright © ANTARA 2025
