The value of the Indonesian currency, the rupiah, experienced a turnaround with a strengthening trend in trading on Tuesday (4/2/2025), after nearly touching the level of Rp 16,500 per US dollar in the previous trading session. According to Bloomberg, the rupiah gained 97 points or 0.59 percent to reach Rp 16,351 per US dollar at the close of trading on Tuesday (4/2/2025). The rupiah was at Rp 16,448 per US dollar in Monday’s trading (3/2/2025), impacted by the escalation of trade wars.
Market sentiment shifted as President Donald Trump of the United States postponed plans to impose trade tariffs on Canada and Mexico. However, the regional currency increase was limited, given Trump’s 10 percent tariff on China that is still set to take effect in the future. Currency Analyst Ibrahim Assuaibi noted, “The President of the United States, Donald Trump, has delayed the implementation of trade tariffs against Canada and Mexico. However, the limited rise in regional currencies is due to the 10 percent tariffs Trump imposed on China that will still be enforced later.”
Assuaibi further explained that the strengthening of emerging market currencies like the rupiah was also influenced by expectations regarding the Federal Reserve’s interest rate policy. Concerns persist over the high US interest rates for an extended period, particularly after strong inflation data from the PCE price index last week. “The Federal Reserve has indicated that strong inflation will reduce the motivation to continue cutting interest rates. Fed officials have also signaled a reluctance to ease policy amidst uncertainty over Trump’s policies,” Ibrahim added.
### Expert Insights on Market Trends
President Trump is reportedly planning to speak with Chinese President Xi Jinping as soon as this week. The White House announced that a 10 percent tariff on all Chinese goods will take effect on Tuesday. This development has a significant impact on global markets, particularly on currencies like the rupiah.
### The Impact of Geopolitical Events on Currency Markets
Geopolitical events, such as trade negotiations and tariff threats, play a crucial role in determining currency values. The recent developments in the US-China trade relations and agreements between North American countries have created fluctuations in the currency markets, affecting currencies like the rupiah.
In conclusion, the strengthening of the rupiah in the face of global economic uncertainties highlights the interconnected nature of currency markets and geopolitical events. The delicate balance between trade policies, interest rates, and inflation expectations continues to influence currency values, making it essential for investors and analysts to closely monitor market trends for informed decision-making.
