Trade war weakens rupiah to 16,943 per US dollar

Rupiah falls as Trump’s new tariffs escalate tensions with China and pressure Asian currencies.

Rupiah and US dollar banknotes are displayed at a currency exchange office in Jakarta, Indonesia, on March 26, 2025. Photo by Dimas Ardian/Bloomberg

By Anna Fadiah and Hayu Andini

The trade war weakens rupiah to 16,943 per US dollar, deepening worries about regional currency stability and economic growth as tensions between the United States and China escalate once again. In morning trading on Wednesday, April 9, the Indonesian rupiah slipped by 0.33%, reflecting a broader trend across Asian financial markets. Investors reacted strongly to the announcement that U.S. President Donald Trump would be imposing a massive 104% tariff on a broad range of Chinese imports — a move that has triggered volatility in currency and equity markets worldwide.

According to Bloomberg, the pressure was not limited to Indonesia. A number of key Asian currencies were also trading lower against the U.S. dollar. The Chinese yuan fell by 0.14%, while the Indian rupee dropped 0.49%. The Malaysian ringgit and Philippine peso each weakened by around 0.2%. Analysts agree that the primary driver behind these declines is not only the newly enforced tariffs but also the growing uncertainty around global economic stability.

Financial expert Ariston Tjendra told Katadata that market concerns remain elevated. “Market concerns are still quite high regarding the issue of this tariff war, so the market response is still negative,” he said. He predicted that the rupiah would likely continue to hover around the 16,900 mark throughout the day, but may not yet break the psychological barrier of 17,000. “Maybe not to 17,000 per US dollar today,” he added.

The sentiment was echoed by Lukman Leong, an analyst from Doo Financial Futures, who also pointed to intensifying trade war tensions as a major factor contributing to the weakening rupiah. According to Leong, today’s trading range for the rupiah is expected to stay between 16,750 and 16,950 per U.S. dollar, underlining the high level of uncertainty investors are dealing with at the moment.

The catalyst for this turmoil is clearly rooted in Washington’s recent tariff policy. President Trump’s decision to impose additional tariffs of up to 104% on all Chinese imports marks one of the most aggressive protectionist moves in recent history. These tariffs came into effect today, Wednesday, April 9, and are in addition to the ones implemented during Trump’s first term. The move is seen as a doubling down on Trump’s hardline economic stance toward China as he begins his second term in office.

White House Press Secretary Karoline Leavitt confirmed the administration’s position during a media briefing. “Countries like China, who choose to retaliate and try to double down on their mistreatment of American workers, have made a mistake,” Leavitt stated. Her comments were widely quoted by outlets such as CNN and further amplified the sense of confrontation between the world’s two largest economies.

China, meanwhile, has signaled that it will respond to these new tariffs in kind. Although specific retaliatory measures had yet to be announced at the time of writing, Beijing’s foreign ministry condemned the new tariffs as “economic bullying” and promised to protect Chinese interests. Economists fear that another round of tit-for-tat tariffs could drag the global economy deeper into a slowdown — or worse, a recession.

That fear is being reflected in the performance of emerging market currencies like the rupiah. As global investors seek safer assets such as the U.S. dollar, the capital outflows from countries like Indonesia increase, putting further pressure on the rupiah. The Indonesian central bank, Bank Indonesia, has remained cautious in its response so far, choosing to monitor market conditions rather than intervene directly. However, continued weakness could prompt monetary action in the coming weeks.

Another layer of complexity is the global oil market, which is also feeling the heat of the trade war. As previously reported, Brent crude prices fell to near $60 per barrel — their lowest in four years — largely due to fears that a prolonged trade dispute would reduce global demand. This dip in oil prices can have a double-edged effect on Indonesia. While cheaper oil may help reduce import costs, it also signals weakening global trade and investment — both of which are vital to Indonesia’s export-driven economy.

Back in Jakarta, businesses and investors are keeping a close eye on how the rupiah performs in the coming days. Several exporters are already adjusting their foreign exchange strategies in anticipation of more volatile trading sessions. Meanwhile, importers are bracing for higher costs as the rupiah's weakening makes dollar-denominated goods and services more expensive.

Despite the grim outlook, some analysts believe the rupiah’s decline could be temporary if diplomatic efforts between the U.S. and China are revived. “If both sides return to the negotiation table and provide some signs of easing, we could see a recovery in emerging market currencies, including the rupiah,” said a senior economist at a Jakarta-based investment bank.

Still, as of now, the headlines are dominated by uncertainty. The trade war weakens rupiah to 16,943 per US dollar, and until policymakers chart a more predictable path forward, that pressure is likely to continue. For Indonesians, the impact is not just macroeconomic — it affects daily life. From fuel prices to imported goods, a weaker rupiah means higher costs and less purchasing power for millions of people.

In conclusion, the intersection of global politics and domestic economics is on full display this week. The U.S.-China tariff battle may be waged in Washington and Beijing, but its consequences are being felt all the way in Jakarta. As the rupiah tumbles, the broader message becomes clear: in an interconnected world, no economy is truly insulated from geopolitical tensions. The hope now rests on diplomacy, but until then, market volatility may be the new normal.