Inflation and Shrinking Trade Surplus Drive Rupiah Pressure
The exchange rate of the rupiah is once again under pressure due to increasing negative sentiment from both domestic and international sources. Rising inflation, a narrowing trade surplus, and global supply uncertainties are identified as key factors weighing on the national currency.
Money and Commodity Market Observer, Ibrahim AssuaIbi, stated that sentiment towards the rupiah worsened after inflation in May 2026 was recorded higher than the previous month. According to data from the Central Bureau of Statistics (BPS), May 2026 inflation reached 0.28% month-on-month, up from 0.13% in April 2026. This increase pushed the Consumer Price Index (CPI) from 111.09 to 111.40, while annual inflation was recorded at 3.08%.
“Several factors influencing May inflation include volatile food prices, energy prices, administered prices, and the weakening of the rupiah exchange rate,” said Ibrahim on Wednesday. He noted that this inflationary rise adds pressure to exchange rate stability amidst increasing global economic uncertainty.
On the other hand, Indonesia still recorded a trade surplus in April 2026 of US$89.1 million, extending a trade surplus trend of 72 consecutive months since May 2020. This surplus was primarily supported by non-oil and gas trade performance, which recorded a surplus of US$3.53 billion. However, Ibrahim noted that this achievement requires closer scrutiny as there was a sharp narrowing of the surplus in nominal terms compared to previous periods.
“Statistically, the April trade surplus narrowed sharply. This underscores the pressure on purchasing power and external resilience due to disruptions in global supply,” he said. Ibrahim identified disruptions in international trade routes caused by uncertainty in the Middle East as a contributing factor, specifically highlighting the impact of global distribution disruptions triggered by tensions around the Strait of Hormuz, one of the world’s most vital energy shipping lanes.
These conditions are seen as having the potential to increase logistics costs and heighten pressure on imports and global commodity prices, ultimately impacting domestic economic stability. The pressure on the rupiah was reflected in Wednesday afternoon trading, where the domestic currency closed weaker by 127 points to Rp17,966 per US dollar, compared to the previous close of Rp17,839 per US dollar. During the trading session, the rupiah even weakened by as much as 130 points.
Ibrahim predicts that rupiah volatility will continue in subsequent trading sessions. He noted that the combination of global and domestic sentiment will remain the primary factor determining the direction of the national currency. “For tomorrow’s trading, the rupiah is expected to move fluctuatedly but still has the potential to close weaker in the range of Rp17,960 to Rp18,030 per US dollar,” he concluded.