Rupiah Under Strain Following May Trade Gap

2026-07-01 05:27 By Farida Husna 1 min. read

The Indonesian rupiah slipped toward IDR 17,940 per dollar on Wednesday, extending a three-day decline as the U.S.

dollar firmed on growing expectations the Fed could raise rates later this year.

Locally, sentiment was weighed down after Indonesia posted a trade deficit in May, the first since April 2020, as exports unexpectedly fell while imports maintained double-digit growth, reducing support from external balance.

Further pressure came from data showing factory activity shrank the most in a year in June, reflecting weaker purchasing power and persistent cost pressures.

Still, the rupiah's losses were capped by resilient foreign inflows into government bonds and Bank Indonesia securities during June, lower oil prices that eased fiscal pressures, and efforts to trim budget allocations for President Prabowo's main programs.

Meanwhile, annual inflation hit a three-month peak in June, due to elevated food prices, though it remained within the upper end of Bank Indonesia's 1-1/2%-3-1/2%.



News Stream
Rupiah Under Strain Following May Trade Gap
The Indonesian rupiah slipped toward IDR 17,940 per dollar on Wednesday, extending a three-day decline as the U.S. dollar firmed on growing expectations the Fed could raise rates later this year. Locally, sentiment was weighed down after Indonesia posted a trade deficit in May, the first since April 2020, as exports unexpectedly fell while imports maintained double-digit growth, reducing support from external balance. Further pressure came from data showing factory activity shrank the most in a year in June, reflecting weaker purchasing power and persistent cost pressures. Still, the rupiah's losses were capped by resilient foreign inflows into government bonds and Bank Indonesia securities during June, lower oil prices that eased fiscal pressures, and efforts to trim budget allocations for President Prabowo's main programs. Meanwhile, annual inflation hit a three-month peak in June, due to elevated food prices, though it remained within the upper end of Bank Indonesia's 1-1/2%-3-1/2%.
2026-07-01
Rupiah Set for Another Monthly Loss, Quarterly Drop around 5%
The rupiah slipped toward IDR 17,900 per dollar on Tuesday, extending prior losses as the U.S. dollar index stayed firm on expectations of further Fed tightening. Markets largely brushed aside remarks from a Bank Indonesia senior official, who pledged to deploy all available tools to stabilise the rupiah. Traders also paid little attention to resilient foreign inflows into government bonds and Bank Indonesia securities, totaling around USD 9 billion through end-June. Lower oil prices, retreating toward pre-Iran conflict levels, likewise did little to support the rupiah despite easing fiscal concerns as the government trims President Prabowo's flagship programs. Focus turned to local data due later this week, where May’s annual inflation accelerated, edging near the upper end of the central bank's target. On the trade front, April’s surplus notched its smallest since 2020, reducing export support. The rupiah is set to continue its recent monthly drop, with a quarterly fall of around 5%.
2026-06-30
Rupiah Weakens Amid Firm Dollar, Domestic Risks
The rupiah edged lower toward IDR 17,860 per U.S. dollar on Monday after briefly strengthening below IDR 17,810, pressured by broad dollar strength ahead of the monthly U.S. jobs report later this week. Locally, focus is shifting to June inflation after headline figures quickened to 3.08% in May, nearing the upper end of Bank Indonesia’s 1-1/2%–3-1/2% target range on rising food and energy costs. Support from exports has waned, with April’s trade surplus narrowing to its smallest since 2020. Meanwhile, concerns over governance and transparency persisted after the government included a controversial provision in new legislation granting blanket legal immunity for purchases of bonds issued by state investment fund Danantara. Still, losses were cushioned by a scaled-back version of President Prabowo’s flagship spending program, underscoring fiscal discipline. Simultaneously, manufacturing activity in May stabilized following a brief contraction, and bank lending stayed resilient.
2026-06-29