Statistics Indonesia (BPS) has revealed that Indonesia’s economy grew 5.12 percent year-on-year in the second quarter (Q2) of 2025, a stronger-than-expected performance that has sparked mixed reactions in the financial markets regarding the future movement of the rupiah.

Analysts suggest the Indonesian rupiah could strengthen in response to the upbeat growth figures and a weakening U.S. dollar, particularly after U.S. ISM services sector data came in below expectations.

“The rupiah remains supported by the better-than-expected Q2 economic growth,” Lukman Leong, analyst at Doo Financial Futures, said as quoted by Katadata.co.id on Wednesday, August 6, 2025, while expecting the currency to trade between Rp16,350 and Rp16,450 per U.S. dollar.

A similar view was shared by Fikri C. Permana, Senior Economist at KB Valbury Sekuritas, who noted that while chances are slim, the rupiah could appreciate toward Rp16,340–Rp16,440 per dollar.

“The stronger economic performance in Q2 is a key driver of support, along with relatively solid demand seen in the latest government Sharia Bond (SBSN) auction,” Fikri said.

However, not all market observers are convinced. The 5.12 percent growth rate has raised eyebrows, especially since it outpaces Q1 growth − traditionally boosted by Ramadan-related consumption.

“GDP growth surpassing 5 percent sounds positive, but many market participants remain doubtful,” Ariston Tjendra, a money market observer, said. He highlighted global risks as a continuing threat to the rupiah’s outlook.

Ariston cited potential U.S. trade policies under President Donald Trump, who has floated new tariffs on semiconductors and pharmaceuticals, as factors that could prompt investors to flee to safe-haven assets like the U.S. dollar.

“That kind of news could push the market back toward safe-haven assets and support the U.S. dollar,” Ariston cited. He forecasts the rupiah may weaken toward Rp16,500, with a support level near Rp16,350.

According to Bloomberg, the rupiah opened slightly stronger, gaining 0.04 percent to Rp16,383 per U.S. dollar in early Wednesday trading. While at the time of this article being written, the Rupiah stood at Rp16,358 per U.S. dollar at noon.

Despite solid domestic indicators, the rupiah remains caught in a tug-of-war between internal optimism and global uncertainty − leaving its near-term trajectory dependent on both economic fundamentals and geopolitical shifts.