Rupiah Weakens to Rp 16,410 per US Dollar Amid Economic Concerns

The Indonesian rupiah weakened significantly on Tuesday (March 11, 2025) as investor concerns over the U.S. economy escalated.

At 9:46 AM WIB, the rupiah was trading at Rp 16,410 per US dollar, down 0.47%, marking its lowest level in five days and pulling the currency back to the Rp 16,400 range.

Several key factors contributed to this decline:

1. Growing Concerns Over "Trumpcession"

Investors are increasingly worried about the risk of a Trumpcession—a term combining Trump and recession, referring to a potential U.S. economic downturn caused by President Donald Trump’s economic policies.

This term was introduced last week and has been widely used by media outlets such as Reuters, which cited Atlanta Fed data indicating that the U.S. economy is shrinking at an alarming rate since the pandemic.

Economists at Goldman Sachs have raised their 12-month recession probability from 15% to 20%, while Morgan Stanley forecasts slower U.S. economic growth this year than previously estimated.

One major concern is Trump’s decision to increase import tariffs on Mexico, China, and Canada, triggering retaliatory measures from these countries and escalating trade wars.

Several economic indicators reflect the negative impact of Trump’s policies:

• U.S. consumer confidence plummeted to 64.7 in February 2025, down from 67.8 previously, reaching its lowest level since November 2023.
• U.S. GDP growth slowed to 2.3% YoY in Q4-2024, the weakest expansion in three quarters, down from 3.1% in Q3.

2. Foreign Capital Outflows Pressuring the Rupiah

Foreign investors recorded an outflow of Rp 843.43 billion on Monday (March 10, 2025).

So far this year, foreign investors have registered a net sell of US$ 1.4 billion in the stock market, adding pressure to the rupiah as capital continues to flow out of Indonesia’s financial markets.

3. Worsening Economic Indicators in Asia-Pacific

Beyond the U.S. economy, the rupiah's weakness is also influenced by deteriorating economic conditions in the Asia-Pacific region:

• Japan’s economy grew just 0.6% QoQ in Q4-2024, slightly below the 0.7% forecast.
• Australia’s NAB business confidence index dropped to -1 in February 2025, its first negative reading this year, driven by weaker sentiment in mining, recreation, and transportation.
• China experienced 0.7% deflation YoY in February 2025, the largest drop in 13 months, as seasonal demand weakened and consumers grew cautious about job security and income.
• China’s Producer Price Index (PPI) contracted by 2.2% YoY in February, marking the 29th consecutive month of contraction.

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