DIGIVESTASI - The exchange rate of the Indonesian rupiah closed today with a gain of 63 points, or 0.39%, to Rp16,279 per US dollar, continuing its positive trend. This strengthening was driven by a combination of global and domestic factors. According to currency analyst Ibrahim Assuaibi, one external factor supporting the rupiah was market caution regarding the trade tariff plans announced by U.S. President Donald Trump.

“Trump mentioned the possibility of a 10% tariff on imports from China in response to concerns about the flow of fentanyl from China to Mexico, Canada, and the U.S. He also threatened a 25% tariff on Canada and Mexico,” Ibrahim explained in his research note on Wednesday (1/22/2025).

While the market was initially relieved that Trump did not impose tariffs immediately upon taking office, his statements on Tuesday reignited fears of a trade war. However, the proposed 10% tariff is lower than the 60% threat he made during his campaign. In anticipation of this, China is expected to roll out more stimulus policies to counter trade pressures with the U.S.

Additionally, Trump declared a national emergency to significantly boost domestic energy production. An executive order signed on Monday allows for increased U.S. energy output, reduced regulations, and the reversal of climate change policies implemented by the previous administration. Trump also announced that the U.S. would withdraw from the Paris Climate Agreement.

In Asia, the yen weakened following comments from Japanese diplomat Atsushi Mimura at the Reuters NEXT Newsmaker event. Mimura stated that a weaker yen would fuel inflation through higher import costs and emphasized close daily coordination between the Japanese government and the central bank. Markets currently estimate an 86.2% probability of a 25-basis-point interest rate hike.

On the domestic front, the Indonesian government is set to revise Government Regulation (PP) No. 36/2023 concerning Export Proceeds (DHE) from natural resource activities. The new regulation, effective March 1, 2025, mandates a 100% retention of export proceeds for one year, compared to the previous policy requiring only 30% retention for three months. This policy will be applied uniformly to both private companies and state-owned enterprises (SOEs), aligning with the standards of neighboring countries like Malaysia and Thailand.

In addition, the government has approved several incentives for exporters adhering to the new policy, including an exemption from income tax (PPh) on interest income from DHE placement instruments. This means exporters will not be subject to the usual 20% tax. Exporters can also use DHE as collateral for back-to-back loans to meet domestic rupiah needs through banks or the Indonesia Export Financing Agency (LPEI).

Swap instruments are also available as a liquidity option for rupiah needs. Through foreign exchange swaps, exporters can convert their foreign-currency DHE into sell swaps with Bank Indonesia.

Considering these data and factors, the rupiah's exchange rate in the next trading session is expected to be volatile, with a potential strengthening range between Rp16,220 and Rp16,290 per US dollar.

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