Ilona Estherina, Jakarta – The rupiah closed lower today, June 19, 2025, trading at Rp16,406 per US dollar. This weakening occurred as the dollar strengthened following the U.S. central bank's (the Federal Reserve or The Fed) decision to maintain its benchmark interest rate.

Lukman Leong, a currency and commodity analyst at Doo Financial Futures, predicts continued pressure on the rupiah due to ongoing conflicts in the Middle East and uncertainty surrounding U.S. import tariffs.

"As long as the Iran-Israel conflict remains heated and tariffs are uncertain, currencies, especially in Emerging Markets, will continue to be under pressure," he told Tempo today. "For now, the rupiah is still expected to stay below 16,500."

According to Bloomberg Spot, the rupiah depreciated by 93.5 points, or 0.57 percent, against the US dollar by the close of trading. Similarly, Bank Indonesia's (BI) Jakarta Interbank Spot Dollar Rate (Jisdor) data showed the rupiah weakening to Rp16,378 per US dollar, compared to Rp16,319 the previous day.

As reported by CBS News, the Fed maintained the federal funds rate in the range of 4.25 percent to 4.5 percent on Wednesday, or early Thursday in Indonesia. This interest rate has remained at this level since President Donald Trump took office in January 2025. The last rate cut, a 0.25 percentage point reduction, occurred in December 2024.

While the dollar strengthened after the Fed's decision, Lukman believes this impact will be short-lived. "The hawkish tone from the Fed can indeed trigger a rebound in the previously weakened US dollar. However, this is only a one-off event as investor attention is still focused on tariffs and the Iran-Israel conflict."

Despite the Fed's cautious stance on rate cuts, the possibility of two 25-basis-point reductions remains open. Therefore, Lukman suggests the outlook for future interest rates is unlikely to change significantly.

Source: https://en.tempo.co/read/2019396/rupiah-dips-after-federal-reserve-holds-interest-rates-stead