Bank Indonesia Governor Projects Rupiah Could Strengthen Again

Bank Indonesia Governor Perry Warjiyo believes the rupiah will reverse its trend and strengthen by July or August 2026 after dropping to the 17,600 level per US dollar. He explained that this movement follows a historical pattern observed whenever the rupiah faces pressure.

“From our experience—and I do not wish to be boastful, as I have lived through crisis after crisis, including 1997-1998, the 2008 global crisis, the taper tantrum, and the Covid pandemic—exchange rate pressures generally ease during July and August,” Perry stated during a meeting with Commission XI of the House of Representatives in Senayan on Monday, 18 May 2026.

Perry noted that the rupiah is currently trading below its fundamental value, meaning it is undervalued. He referenced the basic assumptions of the State Budget (APBN), which targets an average rupiah level of 16,500 with an upper limit of 16,800 per US dollar.

He remains confident in bringing the rupiah back to those levels. According to him, the current weakness is driven by seasonal factors, specifically the high demand for foreign exchange. “In April, May, and June, the demand for foreign exchange is typically large due to the Hajj pilgrimage, dividend payments, and debt servicing,” he said, predicting that the rupiah will improve by July or August.

However, Perry also explained that exchange rate movements are influenced by both global and domestic factors. Globally, the Middle East conflict in February 2026 triggered rupiah depreciation due to high geopolitical risks. Nevertheless, based on previous patterns, the rupiah has proven resilient after significant drops. He cited February of last year, when US reciprocal tariff policies caused the rupiah to touch 17,000 per US dollar before rebounding.

By the close of trading on Monday, 18 May 2026, the rupiah stood at 17,667 per US dollar, weakening by 71 points compared to the previous close.