Economist: Rupiah Poised to Strengthen in Second Half of 2026

Global Markets Economist at Maybank Indonesia, Myrdal Gunarto, has forecast that the rupiah exchange rate will begin entering a strengthening phase from August through the end of 2026, provided global pressures ease and the domestic economy performs in line with the government’s targets.

Should economic growth materialise as designed by the government, Gunarto believes the rupiah has the potential to strengthen towards the state budget (APBN) assumption of approximately Rp 16,500 per US dollar by year-end, particularly if foreign direct investment and foreign capital flows into the financial market increase alongside positive economic prospects and minimal pressure in the stock market.

Gunarto noted that, realistically, the value more closely aligned with fundamental factors sits in the range of Rp 15,200 to Rp 15,800 per US dollar, whilst levels above this range more reflect the dominance of global sentiment and financial cycle overshooting rather than structural changes in the economy.

The economist observed that the rupiah is currently in an undervalued condition. The trade balance remains in surplus and capital flows into the government bond market continue to record net inflows, even though the stock market is experiencing outflows. Fundamentally, this external surplus should be able to offset capital outflows from the stock market, meaning the rupiah still has room to strengthen.

However, Gunarto cautioned that demand for foreign currency is expected to increase during the March to July period, driven by foreign investor dividend payment requirements and rising imports as the economy grows. Should the supply of US dollars remain constrained during this period, the rupiah could move dynamically from April to July.

The correction of the rupiah’s value depends on external normalisation, particularly a decline in global interest rates and the stabilisation of US Treasury yields, as well as domestic factors including fiscal policy credibility, Bank Indonesia’s inflation control, and improved current account transactions through increased value-added exports.