Trump-Powell Conflict Impacts Rupiah Exchange Rate

The ongoing conflict between U.S. President Donald Trump and Federal Reserve Chairman Jerome Powell has affected the movement of the rupiah exchange rate.

Trump has threatened to dismiss Powell for not lowering interest rates, which Trump insists The Federal Reserve should do. Powell, however, has refused to comply with these demands.

Currency analyst Ibrahim Assuaibi noted that the conflict could actually strengthen the rupiah. "The dispute between the Trump administration and the U.S. central bank has positively impacted the rupiah, despite the ongoing trade war and geopolitical tensions," he said during a phone interview on Monday, April 21, 2025.

Ibrahim explained that the U.S. government should not interfere with the Federal Reserve, as it is an independent institution. He warned that if such interference continues, the U.S. dollar could weaken further, leading investors to abandon the currency.

A few days after announcing reciprocal tariffs, Trump reiterated his demand for Powell to cut interest rates. "Energy prices are down, interest rates are down, inflation is down, even egg prices are down 69%, and jobs are up, all within two months—a big win for America. Cut interest rates, Jerome, and stop playing politics!" Trump posted on his social media account on Friday, April 4, 2025.

Powell has since cautioned Trump that implementing reciprocal tariffs could drive inflation up and slow down economic growth. "For now, we are in a wait-and-see position before considering any policy adjustments. We continue to analyze incoming data, forward projections, and assess the risks," Powell stated in his speech at the Economic Outlook event on Wednesday, April 16, 2025.

In response to Powell’s stance, Trump asserted that he has the power to remove Powell from his position. White House economic adviser Kevin Hassett stated on Friday, April 18, 2025, that President Trump and his team were examining the possibility of dismissing the Fed chairman.