Jakarta. The Indonesian rupiah weakened sharply against the US dollar at Friday's close, depreciating by 0.28 percent to Rp 16,235 per dollar, amid mounting external pressures. The currency briefly dipped to a low of Rp 16,190 on Tuesday.

The US dollar remained strong, supported by a combination of factors, including the Federal Reserve's aggressive stance on interest rates through 2025, inflation expectations, and the strong economic outlook under the upcoming Donald Trump administration, according to Ibrahim Assuaibi, Director of Laba Forexindo Berjangka.

"The rupiah started the day weaker by 80 points and even had its trading suspended briefly during the midday session. Next Monday, we expect the rupiah to fluctuate, closing in the range of Rp 16,220–16,300," Ibrahim said.

External factors contributing to the dollar's strength included rising inflation in Japan, which surpassed expectations in December, raising the likelihood of short-term interest rate hikes by the Bank of Japan. Additionally, the ongoing political crisis in South Korea, with Prime Minister Han Duck-soo facing impeachment proceedings, added to the uncertainty.

Meanwhile, China’s announcement to issue a record $411 billion in government bonds for economic stimulus, along with a shift in fiscal policy to support local investments, has also been part of the broader global sentiment affecting the rupiah.

Domestically, Indonesia's economic performance has faced pressure from sluggish consumer demand. Ibrahim pointed out that household consumption growth has been consistently below 5% in 2024, with third-quarter growth at just 4.91% year-on-year. As a result, Indonesia's economy grew at a modest 4.95 percent in the same period.

"Despite government optimism, consumer confidence indicators remain above expectations, suggesting that spending power is weakening," Ibrahim noted. "The third-quarter data from Statistics Indonesia clearly indicates that household consumption growth has slowed down significantly."

Ibrahim said that, without seasonal factors influencing growth, the third-quarter performance provides a clearer picture of the real decline in consumer purchasing power. As the economy struggles to maintain growth, he forecasts that rupiah's weakness could persist as both external pressures and internal consumption constraints weigh heavily on the currency.