Finance Minister targets rupiah strengthening in H2 through fiscal-monetary synergy

Finance Minister Purbaya Yudhi Sadewa is targeting a strengthening of the rupiah exchange rate in the second half of 2026 through more solid fiscal and monetary policy synergy. “The rupiah will gradually strengthen again in the second semester of 2026,” Purbaya said during a working meeting with House of Representatives Commission XI in Jakarta on Wednesday. Purbaya explained the government is closely observing rupiah exchange rate developments up to early June 2026, which have faced pressure, mainly influenced by global sentiment, risk conditions in financial markets, and pressure from the current account and domestic financial transactions. Nonetheless, various deployed policies are believed capable of restoring the rupiah exchange rate, including improved coordination between fiscal, monetary, and financial sector policies. In parallel, the government is also improving the governance of export proceeds and deepening financial markets, which are targeted to strengthen the supply of foreign exchange domestically. These various policies are expected to improve investor confidence, thereby pushing the rupiah to strengthen again in the second half of 2026. The rupiah exchange rate on Wednesday morning moved stronger by 158 points, or 0.88 percent, to Rp17,900 per US dollar compared to the previous close of Rp18,058 per US dollar. The rupiah’s strengthening is estimated to be influenced by the increase in non-subsidised fuel prices, which has a positive impact on the government’s fiscal position. Pertamina Patra Niaga announced an increase in prices for Pertamax and Pertamax Green fuel products starting 10 June 2026. The price of non-subsidised Pertamax (RON 92) rose from Rp12,300 to Rp16,250 per litre, and Pertamax Green 95 (RON 95) rose from Rp12,900 to Rp17,000 per litre. Meanwhile, the prices for non-subsidised Pertamax Turbo (RON 98) remained at Rp20,750 per litre, Dexlite (CN 51) at Rp23,000 per litre, and Pertamina Dex (CN 53) at Rp24,800 per litre. The subsidised fuel Pertalite also remained priced at Rp10,000 per litre, and Biosolar was still priced at Rp6,800 per litre. Other sentiment came from Bank Indonesia’s decision to raise its benchmark interest rate by 25 basis points to 5.5 percent, reflected in the strengthening stock index and sustained foreign investor interest in bond auctions.