US Interest Rate Cut Expectations Increase, Rupiah Forecasted to Strengthen

Jakarta – The rupiah exchange rate is projected to strengthen against the United States (US) dollar triggered by rising expectations of a Federal Reserve (the Fed) interest rate cut.

Doo Financial Futures currency analyst Lukman Leong explained, the US dollar was under pressure due to the increasing prospect of a Fed Fund Rate (FFR) cut followed by weak US ADP jobs data.

“The rupiah has the potential to strengthen against the dollar which is pressured by the increasing prospects of interest rate cuts by the Fed following very weak US ADP employment data,” Lukman said, Thursday, July 3, 2025.

Lukman expects the rupiah to be in the range of Rp16,15 to Rp16,250 per US dollar today.

“The rupiah will be in the range of Rp16,150 to Rp16,250 per US dollar today,” Lukman concluded.

Meanwhile, Bank Mandiri Chief Economist Andry Asmoro said sentiment was also shaped by President Donald Trump’s announcement at Truth Social that the US had finalized a trade agreement with Vietnam.

“The agreement includes a 20 percent tariff on Vietnamese imports, much lower than the 46 percent tariff imposed in April 2025,” he said.

On the economic front, ADP data showed private sector employment unexpectedly declined by 33,000 in June 2025. This fueled concerns about a weakening labor market and strengthened expectations of a potential Fed rate cut.

“The market currently expects a 25 bps rate cut in September 2025, with rising expectations for two additional cuts by the end of the year,” Andry added.

As such, he expects the rupiah to be in the range of IDR 16,195 and IDR 16,285 per US dollar today.

“The rupiah exchange rate against the US dollar today is likely to move in the range of IDR 16,195 and IDR 16,285,” he said. (*)

Editor: Galih Pratama