Indonesian stocks and rupiah weaken on global economic pressures

Indonesia's financial markets experienced a downturn on Friday, July 24, 2026, with both the Composite Stock Price Index (IHSG) and the national currency, the rupiah, closing lower. The IHSG saw a substantial drop of 1.88%, settling at 6,196 points, a stark contrast to its intraday peak above 6,400 earlier in the week.

Market analysts attribute the decline to several negative factors. A primary driver was the surge in crude oil prices, which triggered profit-taking among investors. Compounding this sentiment was the United States' imposition of a 10% import tariff on Indonesian products, a move that directly impacts trade relations and investor confidence.

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After briefly breaking the 6,400 level intraday this week, the IHSG weakened on Friday due to negative sentiment from rising crude oil prices triggering profit taking.

The newly implemented tariffs also exerted pressure on the rupiah, causing it to weaken against the US dollar, closing at Rp 17,963. This depreciation is further exacerbated by concerns over the escalating conflict in the Middle East, which analysts warn could negatively affect Indonesia's external performance, potentially widening the current account deficit and weakening the rupiah in the third quarter of 2026.

Adding to the economic concerns, Indonesia's trade balance recorded a deficit of US$1.61 billion in May 2026. This marks the first trade deficit in 72 consecutive months of surplus, signaling a significant shift in the country's trade dynamics. The rising oil prices also necessitate increased US dollar spending by the government to cover budget deficits, further straining the currency.

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The government has to add US dollars to cover the deficit.