Rupiah under threat, but strategic moves with China and Japan “could offer lifeline”

The recent U.S. tariff policy under U.S. President Donald J. Trump’s administration that targets a number of trading partner countries, such as Indonesia, on Wednesday, April 4, 2025, causes the rupiah exchange rate against the U.S. dollar to plummet.

According to Bloomberg on Friday, April 4, 2025, the rupiah contract traded on foreign market or Non-Deliverable Forward (NDF) plummets to Rp17,006 per U.S. dollar, recording a decline of up to 1.58 percent on 20.53 WIB. Meanwhile, at the time of this article is written, the exchange rate is at Rp16,867 per U.S. dollar.

Trump’s recent import tariff policy implemented recently is believed to worsen the condition of the rupiah exchange rate.

A businessman engaged in the financial industry, as quoted from IDN Financials explained that the 32 percent tariff negotiations for Indonesian exports with the U.S. do need to be continued, but the government should focus on quick steps to maintain the stability of the rupiah exchange rate.

“The JCI is declining and the rupiah is also weakening. What is more dangerous is if international rating agencies such as Moody’s, S&P, or Fitch downgrade Indonesia’s credit rating in June,” the source said, as quoted from IDN Financials on Saturday, April 5, 2025.

The source then emphasized the importance of Indonesia maintaining the rupiah exchange rate, which is currently under pressure due to global market uncertainty.

The source also suggested that Indonesian President, Prabowo Subianto, instruct the Minister of Finance and Governor of the Indonesian Central Bank (BI) to immediately lobby BRICS (Brazil, Russia, India, China and South Africa) countries, especially China.

“If Indonesia can open credit lines with China and Japan, even if the credit rating drops, the rupiah can still be maintained,” the source adds.

Meanwhile, regarding Government Securities (SBN), the source said that what needs to be guarded are SBN owned by foreign investors, which amount to around Rp883 trillion (US$53 billion).

“If Indonesia has around US$30 billion in reserves from China, we don’t need to worry despite the credit rating downgrade,” the source concluded.