Trump Tariffs and Domestic Policies, Rupiah Weakens to IDR 16,500 per US Dollar

JAKARTA, KOMPAS - The exchange rate of the rupiah has come under pressure again, reaching a level of Rp 16,500 per US dollar. This is partly due to the strengthening of the US dollar index against other major currencies, in line with the tariff policies of United States President Donald Trump.

Quoting data from the Jakarta Interbank Spot Dollar Rate (Jisdor) on Friday (28/2/2025), the exchange rate of the rupiah was recorded at Rp 16,575 per US dollar. Compared to the closing at the end of 2024, the rupiah weakened by 2.58 percent.

The Head of the Monetary Management Department of Bank Indonesia (BI), Edi Susiato, stated that almost all regional currencies have weakened against the US dollar exchange rate. This aligns with the strengthening of the US dollar index against other major world currencies (DXY).

"Yesterday, almost all regional currencies weakened against the US dollar. Today, the weakening of currencies in the region also continues," he said when contacted from Jakarta, Friday (28/2/2025).

Since reaching its lowest level of around 100 on September 22, 2025, the DXY has tended to strengthen. This strengthening continued after the presidential election in the U.S. on November 5, 2024, peaking at nearly 110, specifically 109.96, on January 13, 2025. Currently, the DXY is recorded at the 107 level.

According to Edi, Trump's tariff policy remains a factor driving the strengthening of the U.S. dollar index. Trump will eventually impose an import tariff of 25 percent on Canada and Mexico, 10 percent on China, and threaten to impose a 25 percent import tariff on countries in the European Union.

"Of course BI continues to monitor. We boldly enter the market to maintain the balance of supply and demand for foreign exchange in the market, so that market confidence is maintained," he said.

(The weakening of the rupiah) is still due to the risk off action of foreign investors in responding to the adjustment of various new domestic policies, so that outflow is unavoidable.

In an effort to maintain the stability of the rupiah exchange rate, BI can undertake three interventions (triple intervention). The three interventions are carried out, both in the spot market, the Domestic Non Deliverable Forward (DNDF) market, and by purchasing government securities (SBN) in the secondary market.

Meanwhile, Bank Danamon Indonesia economist, Hosianna Evalita Situmorang, opined that the weakening of the rupiah was also influenced by the withdrawal of foreign investors from the domestic financial market. The withdrawal of these foreign investors was, among other things, a response to adjustments in various government policies recently.

"(The weakening of the rupiah) is still from the risk off action (avoiding risk) of foreign investors in response to the adjustment of various new domestic policies, so that outflow is unavoidable," he said when contacted from Jakarta.

Based on transaction data from February 17–20, 2025, non-residents recorded a net purchase of IDR 7.58 trillion in the domestic financial market. This consisted of a net sale of IDR 0.46 trillion in the stock market, a net purchase of IDR 6.96 trillion in the government bond market (SBN), and a net purchase of IDR 1.08 trillion in Bank Indonesia Rupiah Securities (SRBI).

On the other hand, since the beginning of the year until February 20, 2025, non-residents recorded a net purchase of Rp14.48 trillion in the domestic financial market. This consists of a net sale of Rp7.74 trillion in the stock market, a net purchase of Rp18.99 trillion in the SBN market and Rp3.23 trillion in SRBI.

"In the future, hopefully with the implementation of DHE (foreign exchange from exports), there will be a direction for improving the rupiah exchange rate," said Hosianna.

Previously, the government revised Government Regulation (PP) Number 36 of 2023 concerning DHE SDA which has been in effect since August 1, 2023, by issuing PP No. 8/2025 concerning DHE SDA. The policy which came into effect on Saturday (1/3/2025) is intended for exporters engaged in the natural resources (SDA) sector with a minimum export value of 250,000 US dollars.

They are required to place all of their export proceeds or 100 percent into the Indonesian financial system since placement for a year, especially for the mining, plantation, forestry, and fisheries sectors. The oil and gas sector is excluded, while still referring to the provisions of PP No. 36/2023.

With the latest changes, the government claims that the potential for foreign exchange entering Indonesia's financial system can reach 80 billion US dollars. Now, Indonesia's foreign exchange reserves position at the end of January 2025 reached 156.1 billion US dollars, up compared to the position at the end of December 2024 which was 155.7 billion US dollars.