Indonesian Rupiah Weakens Amid Geopolitical Tensions and Inflation Data

The Indonesian Rupiah closed Tuesday afternoon weaker against the US dollar, depreciating by 34 points or 0.19% to settle at Rp 17,839 per dollar. This weakening is attributed to a combination of persistent geopolitical uncertainties and the release of domestic inflation data.

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The Rupiah's weakening is still influenced by the sentiment of continued geopolitical uncertainty and the release of inflation data from the Central Statistics Agency.

External influences included statements from US President Donald Trump regarding ongoing negotiations with Iran. Trump's comments, which initially suggested a pause in talks followed by an affirmation of their continuation, alongside his expectations for a deal to extend a ceasefire and reopen the Strait of Hormuz, contributed to market jitters. Additionally, Trump's proclamation on import tariffs for copper, aluminum, and iron, with specific adjustments for agricultural and industrial equipment, added another layer of external economic influence.

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Trump said he did not object if the talks ended. But, shortly thereafter, he issued a social media post stating that talks with Iran were continuing.

Domestically, the Indonesian economy showed mixed signals. The Central Statistics Agency reported an annual inflation rate of 3.08% for May 2026. The Purchasing Managers' Index (PMI) for Indonesian manufacturing rose to 50.0 in May, indicating a return to expansion after a contraction in April. However, the sector still faces challenges from rising raw material costs and supply chain disruptions that are constraining production.

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Trump expects a deal to extend the ceasefire and reopen the Strait of Hormuz in the next week.