Rupiah Strengthens Following Fed Governor's Remarks

October 15, 2025 | 05:51 pm

TEMPO.CO, Jakarta - The exchange rate of the Indonesian rupiah at the close of Wednesday's trading strengthened by 27 points or 0.16 percent to Rp16,576 per U.S. dollar from the previous Rp16,603 per U.S. dollar.

Meanwhile, Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) remained unchanged today at Rp16,577 per U.S. dollar, the same as the previous day.

Currency analyst and Director of Laba Forexindo Berjangka, Ibrahim Assuabi, considers the strengthening of the exchange rate of the rupiah to be influenced by the statement of Federal Reserve Governor (The Fed) Jerome Powell, which is interpreted as "dovish."

"Jerome Powell said that the U.S. economy may be on a stronger path than anticipated by some, but he warned that a much weaker labor market is emerging," Ibrahim said in a written statement in Jakarta on Wednesday, October 15, 2025, as quoted from Antara.

Quoting Xinhua, Powell emphasized that there is no risk-free path for interest rate policy amidst the tension between employment targets and inflation.

At the National Association for Business Economics meeting in Philadelphia, USA, he stated that the Fed will set policy based on the evolution of economic prospects and risk balance, rather than following a predetermined path.

Due to the closure of the U.S. federal government and the resulting delay in official economic data reports, Powell stated that the central bank has its own data sources with which to monitor the health of the U.S. economy. Based on the available data, it is clear that the outlook for employment and inflation has not changed significantly since the September 2025 Federal Open Market Committee (FOMC) meeting.

During the October FOMC meeting, it is estimated that the Fed will again cut interest rates by a quarter point at the end of this month.

"His comments reinforce market expectations for potential Fed interest rate cuts in October and December, which will lower U.S. government bond yields and weaken the dollar," said Ibrahim.

The market indicates that the Fed will cut interest rates by 25 basis points (bps) at the upcoming meeting on October 29 with a 97 percent chance, according to CME Fed Watch.

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