Beyond BI Policy, Other Factors Driving Rupiah Weakness Identified
The weakening of the rupiah exchange rate is reportedly influenced not only by the monetary policy of Bank Indonesia (BI) but also by several other external factors arising from global geopolitical dynamics. This was stated by the Chief Economist of Permata Bank, Josua Pardede, when asked for his opinion regarding the views of BI Governor Perry Warjiyo concerning rupiah movements and exchange rate stabilisation policies.
“In my calculation, it should be the same (as the BI Governor’s calculation), but the rupiah does not exist in a vacuum,” Josua said during a Bank Indonesia media briefing in Makassar, South Sulawesi, on Saturday, 23 May 2026.
He explained that various other factors also influence the movement of the rupiah in global financial markets. These include capital market conditions, foreign investor decisions, global indices such as the MSCI, and the dynamics of foreign capital inflows into Indonesia.
“Other factors include investor sentiment, the MSCI, and our foreign inflow decisions. These contribute to the movement, so we cannot view Bank Indonesia’s policy in isolation,” he noted.
Consequently, Josua believes that interest rate policies and exchange rate stabilisation measures from the Central Bank are crucial to responding to these various dynamics and maintaining market confidence. He also acknowledged that the effectiveness of BI’s policies is heavily influenced by global sentiment, geopolitical conditions, and the policy direction of the United States central bank, the Federal Reserve (The Fed).
Josua assessed that the current volatility of the rupiah remains within a reasonable range, even as global financial markets face pressure due to worldwide economic uncertainty. Furthermore, coordination between the government and Bank Indonesia remains a vital factor in maintaining national economic stability, particularly when facing external pressures on the rupiah exchange rate.
“Therefore, we must look at the situation holistically, rather than focusing solely on Bank Indonesia’s single policy,” he concluded.