The rupiah exchange rate is once again facing heavy pressure against\nthe US dollar. The Garuda currency has even breached a new psychological\nlevel of Rp17,500\/US$ in today\u2019s trading.<\/p>\n
According to Refinitiv data, in Tuesday\u2019s trading (12\/5\/2026) at\n09:15 WIB, the rupiah was observed weakening to touch the Rp17,500\/US$\nlevel. This position simultaneously becomes the weakest intraday level\nof all time for the rupiah.<\/p>\n
Pressure on the rupiah has actually been evident since the start of\ntrading. At the market open this morning, the rupiah immediately plunged\nsignificantly by 0.43% to Rp17,480\/US$.<\/p>\n
This weakening continues the pressure that has occurred in recent\ntimes. The rupiah previously also breached the psychological level of\nRp17,400\/US$ last Tuesday (5\/5\/2026).<\/p>\n
This means that in just about a week, two important psychological\nlevels for the rupiah have been breached. After Rp17,400\/US,\u2006t<\/em>h<\/em>e<\/em>m<\/em>a<\/em>r<\/em>k<\/em>e<\/em>t<\/em>i<\/em>s<\/em>n<\/em>o<\/em>w<\/em>w<\/em>i<\/em>t<\/em>n<\/em>e<\/em>s<\/em>s<\/em>i<\/em>n<\/em>g<\/em>t<\/em>h<\/em>e<\/em>r<\/em>u<\/em>p<\/em>i<\/em>a<\/em>h<\/em>w<\/em>e<\/em>a<\/em>k<\/em>e<\/em>n<\/em>i<\/em>n<\/em>g<\/em>f<\/em>u<\/em>r<\/em>t<\/em>h<\/em>e<\/em>r<\/em>t<\/em>o<\/em>b<\/em>r<\/em>e<\/em>a<\/em>c<\/em>h<\/em>R<\/em>p<\/em>17,\u2006500\/U<\/em>S<\/em><\/span>.<\/p>\n This condition indicates that demand for the US dollar is very high\nand selling pressure on the rupiah remains very strong.<\/p>\n What Causes the Rupiah to Breach Rp17,500?<\/p>\n External pressure in today\u2019s trading can be said to be playing a\nsignificant role. This is evident from the movement of other Asian\ncurrencies, most of which are also weakening substantially against the\nUS dollar.<\/p>\n The rupiah\u2019s weakening to breach Rp17,500\/US$ is inseparable from the\nre-escalating external pressures. The main factor pressuring the rupiah\nis the strengthening of the US dollar in the global market.<\/p>\n Pressure on the rupiah primarily comes from increasing uncertainty in\nthe Middle East. The US-Iran conflict, which has not truly subsided, is\nonce again making global markets cautious.<\/p>\n Markets are again scrutinising statements from US President Donald\nTrump doubting the sustainability of the US-Iran ceasefire and rejecting\nTehran\u2019s latest peace offer.<\/p>\n Additionally, reports indicating that Trump will meet with his\nnational security team to discuss the possibility of resuming military\noperations are adding to market concerns.<\/p>\n Plans to escort commercial ships through the Strait of Hormuz are\nalso drawing attention.<\/p>\n The Strait of Hormuz is one of the world\u2019s most important oil routes,\nso any tension in the region can directly trigger concerns over global\nenergy supplies.<\/p>\n This situation then pressures the rupiah through two aspects.<\/p>\n First, demand for the US dollar as a safe-haven asset is increasing\nagain. When global uncertainty rises, investors typically tend to seek\nassets considered safer, one of which is the US dollar.<\/p>\n This has caused the US dollar index (DXY) to strengthen again to\n98.117 in this morning\u2019s trading.<\/p>\n On the other hand, currencies of emerging countries like the rupiah\nbecome more vulnerable. With the strengthening of the US dollar in the\nglobal market, the room for emerging market currencies to strengthen\nbecomes increasingly narrow.<\/p>\n Second, the unresolved conflict is also keeping global oil prices at\nhigh levels. In this morning\u2019s trading, the benchmark Brent crude oil\nprice rose 0.95% to US$105.2 per barrel, while WTI crude oil rose 1% to\nUS$99 per barrel.<\/p>\n For Indonesia, this condition becomes an additional negative\nsentiment for the rupiah. High oil prices potentially increase the need\nfor US dollars for energy imports.<\/p>\n At the same time, rising oil prices can also add inflation risks and\nfiscal pressures, especially if the burden of energy subsidies\nincreases.<\/p>\n This fiscal pressure is important because the budget deficit is\ncurrently under significant scrutiny. In 2025, the budget deficit was\nrecorded at Rp695.1 trillion, equivalent to 2.92% of gross domestic\nproduct (GDP).<\/p>\n This figure is still below the maximum budget deficit limit set in\nthe law, namely 3% of GDP.<\/p>\n Entering 2026, fiscal pressures continue. In the first quarter of\n2026, the budget deficit was recorded at Rp240.1 trillion, equivalent to\n0.93% of GDP. This figure is higher compared to the same period the\nprevious year, where in the first quarter of 2025 the budget deficit was\nRp104.2 trillion or 0.43% of GDP.<\/p>\n This situation is what is causing market participants to begin\nquestioning the government\u2019s ability to keep the budget deficit below\nthe 3% of GDP limit throughout 2026.<\/p>\n Pressure on the rupiah is intensifying because high oil prices can\nalso influence the direction of US central bank policy, the Federal\nReserve.<\/p>\n The surge in energy prices risks making US inflation difficult to\ndecline again. If inflation remains high, markets will become\nincreasingly convinced that US interest rates need to stay high\nlonger.<\/p>\n This condition makes dollar-based assets remain attractive to global\ninvestors. As a result, capital flows to emerging countries may be held\nback. Currencies like the rupiah thus find it even harder to gain\nstrengthening room.<\/p>\n Currently, investors are also awaiting the release of US consumer\ninflation data for April. That data will be one of the important\nindicators to see how far the Iran war is affecting the US economy and\nthe future direction of Fed policy.<\/p>\n If the inflation data shows that price pressures remain strong,\nexpectations for Fed rate cuts could be pushed back further. This has\nthe potential to prolong pressure on emerging market currencies,\nincluding the rupiah.<\/p>\n In addition to global factors, the rupiah\u2019s weakening is also\nexacerbated by market psychological factors. The breach of the\nRp17,500\/US$ level becomes a new signal that pressure on the rupiah has\nnot subsided.<\/p>\n Psychological levels are very important in currency movements. When\nthose levels are breached, market participants usually become more\ndefensive.<\/p>\n Demand for the US dollar can increase, both for transaction needs,\nhedging, or as<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/analysis-and-causes-of-the-rupiahs-plunge-us-dollar-already-breaches-rp17-500-1778561573",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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