Dollar Breaches Rp 17,500, BI Chief Reveals Triggers for Rupiah Weakness

Jakarta, CNBC Indonesia - Bank Indonesia (BI) has commented on the weakening of the rupiah exchange rate today. The rupiah’s depreciation is influenced by the conflict in the Middle East. BI Senior Deputy Governor Destry Damayanti explained that the ongoing conflict in the Middle East, with increasing intensity, is pushing up oil prices and global uncertainty. “From the domestic side, the rising seasonal demand for dollars, such as payments for external debt and dividends, as well as needs for the Hajj pilgrimage, is driving increased demand for dollars in the domestic market,” Destry told the media on Tuesday (12/5/2026). To address this, Destry emphasised that BI will continue to commit to being present in the market through smart interventions in the spot market, DNDF, and NDF, as well as optimising all monetary operation instruments, in the hope of reducing pressure on the rupiah. In line with these efforts, Destry said the central bank sees an improvement in foreign investor confidence, with foreign capital flows starting to return to the domestic money market. “BI also sees that foreign investor confidence in portfolio assets continues to improve, as reflected in inflows, particularly to the SBN and SRBI markets during April amounting to Rp 61.6 trillion,” she said. According to Destry, BI’s foreign exchange liquidity availability in the domestic market is also sufficiently high, with foreign currency third-party funds growing 10.9% year to date (ytd) at the end of March. Therefore, BI predicts that this seasonal pressure will ease, allowing the rupiah exchange rate to return to its fundamental level.