Indonesian Rupiah Hits Record Low
In April, the Indonesian rupiah plummeted to a historic low of approximately 16,950 per USD, exacerbated by the U.S. implementation of a 104% tariff on Chinese imports, which intensified the already strained relations between the world's two largest economies. Complicating matters, the U.S. has imposed a 32% tariff on Indonesian goods. President Prabowo Subianto of Indonesia has directed his cabinet to streamline trade regulations and reduce non-tariff barriers while analyzing the repercussions on key export sectors, including textiles, electronics, footwear, and palm oil. This economic pressure is compounded by Indonesia's current account deficit persisting into its seventh consecutive quarter by the fourth quarter of 2024, highlighting ongoing structural trade imbalances. The rupiah's depreciation is further influenced by the widespread strength of the dollar, driven by expectations of sustained high U.S. interest rates, which have triggered capital outflows from emerging markets. In response, Bank Indonesia has intervened to steady the currency through foreign exchange operations and policy communication, yet the downward trend persists amid global uncertainties. The new U.S. tariffs will be enforced starting on April 9, at 12:01 AM Eastern Time (04:01 AM GMT).
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