Indonesian Rupiah predicted to face volatility amid global and domestic factors

The Indonesian Rupiah showed resilience, strengthening by 21 points to close at 17,922 against the US dollar on Friday, June 26, 2026. Despite this gain, analysts anticipate continued volatility in the upcoming week, with predictions placing the Rupiah's value between 17,920 and 17,960 on Monday, and a broader range of 17,880 to 18,100 for the entire week.

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the Rupiah will move fluctuatingly but will close weakened between 17,920 and 17,960 per US dollar.

Several global and domestic factors are contributing to the currency's fluctuations. Lingering tensions from the Middle East conflict, particularly concerning the Strait of Hormuz, are creating uncertainty. While oil shipments have increased following a perceived de-escalation between the US and Iran, concerns about the long-term stability of the waterway persist, influencing global trade and currency markets.

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For the week ahead, the Rupiah will be in the range of 17,880-18,100 per US$.

Domestically, the market is responding positively to the Indonesian government's consideration of further budget efficiencies and reductions for its "Free Nutritious Meal" program. This initiative is seen as a measure to maintain fiscal stability. Concurrently, Bank Indonesia has been actively intervening in the market through spot, Domestic Non-Deliverable Forward (DNDF), and government bond purchases to curb volatility and prevent a significant depreciation of the Rupiah, which had been approaching the 18,000 mark against the dollar.

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The strengthening of the dollar against several currencies, including the Rupiah, is occurring amidst the Middle East conflict.

Adding to the external pressures, rising inflation in the United States is prompting expectations that the US Federal Reserve may maintain its benchmark interest rates. Core inflation has climbed to 3.4%, and headline inflation increased to 4.1%, marking the highest annual figures since April and October 2023, respectively. This economic climate in the US further impacts global currency movements and investor sentiment.

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The market is responding positively to the government's policy of considering efficiency and further budget reduction for the Free Nutritious Meal program to maintain fiscal stability.