Five Crucial Points for the Rupiah in 2 Years: How Was It at the Beginning of the Prabowo Era?

Jakarta, CNBC Indonesia - The Garuda currency has moved quite volatilely since 2024, or over the last two years. The rupiah has on several occasions been able to strengthen sharply against the United States (US) dollar, but on the other hand has also repeatedly experienced heavy pressure. During this period, there were several important points when the rupiah managed to recover quite strongly, as well as when the currency weakened sharply, penetrating new psychological levels. The following are five points of rupiah strengthening and weakening in the last two years that are interesting to discuss. 1. April 2024: Rupiah Suddenly Hit Sharply. One of the rupiah’s sharpest weakening points occurred on 16 April 2024. At that time, the rupiah weakened from the level of Rp15,840/US$ on 15 April 2024, pushed up to penetrate the level of Rp16,170/US$ on 16 April 2024. The rupiah was pressured by 330 points in just one trading day, or weakened by around 2.08%. The sharp pressure on the rupiah at that time was caused by external factors, namely the heating up of geopolitics in the Middle East. Iran launched a direct attack on Israel on 13 April 2024 local time, using drones and missiles. The attack was Iran’s first direct attack on Israeli territory and increased concerns over a wider conflict. Market worries grew larger because the Middle East is an important region for global energy supply. When geopolitical tensions increase, investors usually tend to reduce risky assets and move into assets considered safer, including the US dollar. This condition put currencies of developing countries, including the rupiah, under pressure. 2. August-September 2024: Rupiah Rebound at the Start of the Prabowo Era and The Fed’s Rate Cut. After having been depressed quite deeply in mid-2024, the rupiah began to show a strong recovery in August 2024. On 6 August 2024, the rupiah was still at the level of Rp16,160/US.However, withinjustafewtradingdays, theGarudacurrencymanagedtostrengthensharplytoapositionofRp15, 430/US on 20 August 2024. This means that in a short time, the rupiah strengthened by around 730 points or around 4.52%. This strengthening was one of the most striking rebound phases in the last two years. Interestingly, the rupiah’s strengthening did not stop in August. This positive trend continued into September 2024. The rupiah even briefly entered the Rp15,100s/US$ area at the end of September. The peak occurred on 25 September 2024, when the rupiah was able to perform mightily to the level of Rp15,095/US.Thispositionbecametherupiah′sstrongestlevelfromthattimeuntilnow, orinthelasttwoyears.Therupiah′ssuccessinoutperformingthegreenbackatthattimecouldnotbeseparatedfrominternalandexternalfactors.Domestically, therupiahwassupportedbytheinflowofforeigncapitalintothedomesticfinancialmarket.BankIndonesiaatthattimesaidtherupiah′sstrengtheningoccurredduetotheconsistencyofBI′smonetarypolicymix, whichwasalsofollowedbyforeigncapitalinflows.ThisperiodwasalsoanimportantmomentforIndonesiaasitofficiallyenteredaneweraunderPresidentPrabowoSubiantoon20October2024.Additionally, relativelycontrolleddomesticinflationhelpedgiveroomfortherupiahtostrengthen.LPEMFEBUInotedthatIndonesia′sheadlineinflationinAugust2024wasat2.12, immediately weakened sharply to Rp16,860/US$ on Tuesday (8/4/2025). This means the rupiah was pressured 305 points in just one trading day, or weakened by around 1.84%. This movement became one of the largest daily pressures on the rupiah throughout 2025. The pressure on the rupiah at that time could not be separated from the accumulation of negative global sentiment that formed while the Indonesian market was on a long holiday. The main factor came from the announcement of a reciprocal tariff policy by United States President Donald Trump on 2 April 2025. The policy was applied broadly to many countries. The US set a baseline tariff of 10% for imports from various countries, then imposed higher additional tariffs on certain countries considered to have large trade barriers against US products. Indonesia was among the countries affected. In this tariff scheme, the US assessed that Indonesia seemingly imposed a trade barrier of 64% against US products, with a calculation that not only includes tariffs, but also non-tariff barriers and other factors. From that figure, the US then set a reciprocal tariff of 32% for goods originating from Indonesia, or half of the figure claimed as Indonesia’s trade barrier against the US.