Current Account Deficit Widens, Rupiah Under Further Pressure

Bank Indonesia (BI) reported the current account deficit (CAD) widened to 1.1% of GDP. The figure rose from 0.7% of GDP in the previous quarter. This is believed to be one of the reasons for the rupiah’s continued depreciation against the US dollar. Valbury Asia Futures Research & Education Coordinator Nanang Wahyudin stated that the deficit means foreign currency demand for imports, services, and overseas income payments exceeds earnings from exports and remittances. “Thus, the structural availability of dollars domestically must be covered by capital inflows or BI’s foreign exchange reserves,” he told Kompas.com on Thursday (28 June 2026). The current account deficit is considered to have a direct and significant impact on the rupiah’s depreciation. A current account deficit means the amount of money or foreign currency flowing out of the country for economic activities far exceeds that coming in. Nanang added that when portfolio capital flows out or the inflow volume is insufficient, the CAD leaves the domestic forex market short of US dollars. “Exacerbating rupiah depreciation pressures, regardless of strong fundamental claims,” he added. “Thus, domestic dollar supply is relatively tight, making the rupiah more vulnerable to pressure,” he explained. On Thursday (28 May 2026), the rupiah closed at Rp17,845.5 per US dollar in the spot market, depreciating 44.5 points, or 0.25%. Economist and Professor at the Faculty of Economics and Business at Andalas University, Syafruddin Karimi, explained that a current account deficit of 1.1% of GDP directly pressures domestic dollar supplies.