Rupiah Declines Amid Regional Currency Drop Due To Risk-Off Sentiment

Rupiah Declines Amid Regional Currency Drop Due To Risk-Off Sentiment

The Indonesian rupiah (IDR) experienced a decline on Thursday, June 19, 2025, amid a broader regional currency drop, driven by risk-off sentiment. The rupiah closed down by 0.2% to Rp. 16,381 per US dollar, following a similar trend observed in other Asian currencies [1].

The decrease in the rupiah can be attributed to several factors. Firstly, the US dollar strengthened against major currencies as investors sought safe-haven assets amid geopolitical tensions and economic uncertainties. The US Federal Reserve's recent hawkish stance and the ongoing trade tensions between major economies have contributed to this risk-off sentiment [2].

Additionally, weak consumer confidence data from the United States has sparked concerns over the slowing US economy. According to Bloomberg, the US consumer confidence index deteriorated at its sharpest pace in 3-1/2 years in February, with inflation expectations soaring for the next 12 months [1]. This has led to a flight to quality, with investors favoring the US dollar over other currencies.

Furthermore, the recent launch of the gold business or bullion service in Indonesia by President Prabowo Subianto may have had an impact on the rupiah. The introduction of the bullion service, which allows for gold deposits, financing, trading, and storage, aims to optimize the use of national gold reserves. However, the immediate impact on the currency remains uncertain [1].

In contrast, the rupiah's decline was also influenced by the regional economic slowdown. Germany's economy shrank in the last three months of 2024 compared to the previous quarter, adding to the overall economic uncertainty [1].

Despite these factors, the rupiah is expected to fluctuate but close higher on trading Thursday, June 19, 2025, in the price range of IDR 16,320 - IDR 16,390 per US dollar [1].

References:
[1] https://voi.id/en/economy/463869
[2] https://www.allsides.com/news/2025-06-18-0000/banking-and-finance-agrifood-giant-wilmar-hands-over-almost-23-its-annual