A Simple Explanation for Why the Rupiah Is Weakening

Jakarta, CNBC Indonesia - The rupiah’s exchange rate against the US dollar continues to come under pressure, trading around Rp17,725 per US.BasedonRefinitivdata, sincethismorningtherupiahhasbeenunderpressure.At09 : 15WIB, therupiahstoodatRp17, 700perUS, weakening 0.34% against the US dollar.

Deputy Governor of Bank Indonesia Aida S Budiman explained that the pressure on the rupiah so far is caused by mismatches between the demand and supply of dollars. “It weakens because what is offered for the US dollar is less than what is demanded, in simple terms,” she said at the Jogjakarta Financial Festival at Jogja Expo Centre (JEC) in Yogyakarta today, Friday (21/5/2026).

The problem, according to Aida, can be seen from Indonesia’s current account position, which again posted a deficit at the start of this year. The current account deficit even reached US$4 billion or 1.1% of GDP in Q1-2026. The deficit increased when compared with Q4-2025 at 0.7% of GDP or US$2.5 billion.

“Our current account means we net pay more than we receive; this is the issue,” she emphasised.

To address this problem, Aida said the government and BI have a number of measures to ensure the supply of dollars domestically can match the high demand. One of them is the presence of the export state-owned enterprise PT Danantara Sumberdaya Indonesia (PT DSI).

“The President will create a body to ensure export receipts are better and more optimal,” she noted.

Aida stressed that besides that, BI and the government are now also jointly working to attract foreign capital into the country to strengthen the domestic supply of dollars.

“And to close the current account balance, there are capital transactions. Capital transactions are currently experiencing a decline and must attract foreign inflows into Indonesia so that we can meet the needs,” she said.

(arj/arj)