Rupiah supported by Bank Indonesia monetary policy stability
The Indonesian rupiah closed stronger at the Jakarta stock exchange on Wednesday, appreciating 29 points or 0.17 per cent to Rp16,800 per US dollar, compared with the previous close of Rp16,829 per US dollar.
According to Research and Development analyst Taufan Dimas Hareva from the Indonesia Commodity and Derivatives Exchange (ICDX), the stability of Bank Indonesia’s monetary policy, which has maintained relatively stable benchmark interest rates, remains a fundamental support factor for the rupiah.
“Nevertheless, corporate demand for US dollars and the dynamics of foreign capital flows in the bond and equity markets continue to influence daily volatility,” Hareva told Antara News Agency in Jakarta on Wednesday.
Regarding global sentiment, expectations of the Federal Reserve’s interest rate policy remaining relatively restrictive continue to drive capital flows back into US dollar-denominated assets.
“If the speech carries a protectionist tone or reinforces tariff policy, risk-off sentiment could increase and place additional pressure on emerging market currencies, including the rupiah. However, the impact is typically short-term and highly dependent on the substance of the policy announced,” said Hareva.
During his address to the US Congress, President Donald Trump stated that almost all countries and companies want to maintain the tariff agreements they had made before the US Supreme Court’s decision regarding tariffs was issued.
On 20 February, the US Supreme Court ruled that President Donald Trump lacks the authority to impose global tariffs under the International Emergency Economic Powers Act (IEEPA).
On 21 February, Indonesian President Prabowo Subianto assessed that the 10 per cent tariff would be beneficial for Indonesia, whilst stating that Indonesia was prepared to face all possibilities.
The Indonesian Government has assured that the trade agreement between Indonesia and the United States continues to proceed according to the agreed mechanism, despite the recent US Supreme Court decision regarding Trump’s tariff policy.
The Jakarta Interbank Spot Dollar Rate (JISDOR) set by Bank Indonesia also strengthened to Rp16,813 per US dollar today, compared with the previous level of Rp16,830 per US dollar.