Bank Indonesia: Rupiah weakness driven by geopolitical tension concerns
Bank Indonesia (BI) has stated that the weakening of the rupiah exchange rate continues to be influenced by concerns over geopolitical tensions in the Middle East, which have kept oil prices high at above US$100 per barrel. This situation increases global inflation risks and puts pressure on the fiscal outlook.
“Exchange rate pressure is also driven by the foreign exchange needs of importers and capital outflows from domestic asset portfolios,” said Erwin Gunawan Hutapea, Head of the Monetary Management and Securities Assets Department at BI, in a statement in Jakarta on Monday.
BI stated that it will continue to be present in the market to ensure that market mechanisms function properly and that the stability of the rupiah exchange rate is maintained in accordance with its fundamentals. This will be achieved through the management of interest rate structures in the money market by strengthening pro-market monetary operation strategies.
Furthermore, BI is also enhancing the effectiveness of exchange rate stabilisation and liquidity adequacy through underlying transactions for hedging swaps with incentive acquisitions.
Erwin said that interventions will continue to be carried out consistently and sustainably through non-deliverable forward (NDF) transactions in the offshore market, spot transactions, and domestic non-deliverable forward (DNDF) in the domestic market, accompanied by the purchase of Government Securities (SBN) in the secondary market.
“Coordination and communication with corporations and market participants are being carried out intensively, including to encourage foreign capital inflows by optimising the incentives provided, as well as diversifying foreign exchange demand through the Local Currency Transaction (LCT) scheme,” said Erwin.
In general, Erwin noted that the movement of the rupiah remains in line with regional currency movements, with an appreciation of 0.37 per cent quarter-to-date (qtd). Additionally, the foreign exchange reserve position increased to the level of US$146.5 billion at the end of August 2026.
On Monday (21/9) afternoon, the Jakarta Interbank Spot Dollar Rate (JISDOR) was recorded at the level of Rp17,813 per US dollar. This level weakened by 0.38 per cent compared to Rp17,745 per US dollar on Friday (18/9).