Dollar Holders Beware: BI Governor's Take on the Rupiah's Fate

Jakarta, CNBC Indonesia - Bank Indonesia Governor Perry Warjiyo has revealed that the rupiah exchange rate is in an undervalued condition or moving not in line with Indonesia’s healthy economic fundamentals.

Perry stated that economic growth of 5.61% in the first quarter of 2026, low inflation, strong foreign exchange reserves, and high credit growth should serve as a basis to indicate that the rupiah will be stable and strengthen. However, he acknowledged that in the short term, there is pressure on the exchange rate, with it currently breaching the level of Rp17,400 per US dollar.

“The reasons are two: global factors, and then seasonal factors,” said Perry.

He explained that the global factors in question include high oil prices, rising US interest rates, high yields on 10-year US Treasury bonds up to 4.47%, and the strengthening of the US dollar.

“And the Coordinating Minister for the Economy just mentioned the capital flight from emerging markets, including Indonesia,” he said.

In addition, Perry also explained that there are seasonal reasons occurring.

“April, May, June is indeed a period of high demand for dollars, for dividend repatriation payments, debt payments, and also for Hajj pilgrims. But the rupiah is undervalued and will stabilise and tend to strengthen going forward. That’s number one,” he said.

Today, Wednesday (6/5/2026), the rupiah opened stronger against the US dollar. Referring to Refinitiv data, the Garuda currency started trading in the green zone with an appreciation of 0.34% to Rp17,350/US.Thisstrengtheningcameaftertheprevioustradingsessionwheretherupiahclosedweakerby0.26.

Meanwhile, the US dollar index or DXY, which measures the strength of the greenback against six major world currencies, was observed to be weakening. As of 09:00 WIB, DXY fell 0.21% to 98.234.