Inflation and Shrinking Trade Surplus Pressure Rupiah
The Rupiah exchange rate is once again under pressure as negative sentiment intensifies both domestically and abroad. Rising inflation, a narrowing trade surplus, and uncertainty regarding global supplies are identified as the primary factors weighing on the movement of 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 Indonesian Central Statistics Agency (BPS), May 2026 inflation reached 0.28% month-to-month (MtM), an increase from 0.13% in April 2026. This rise pushed the Consumer Price Index (CPI) from 111.09 to 114.40, 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,” Ibrahim said on Wednesday.
He noted that this inflationary rise adds pressure to exchange rate stability amidst increasing global economic uncertainty. On the other hand, Indonesia did record a trade surplus in April 2026 of US$89.1 million, extending a surplus trend that has lasted for 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 believes this achievement requires closer scrutiny as there was a sharp nominal narrowing of the surplus 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 supplies,” he said.
According to Ibrahim, one factor affecting this condition is the disruption of international trade routes caused by uncertainty in the Middle East. He highlighted the impact of global distribution disruptions triggered by tensions around the Strait of Hormuz, one of the world’s most vital energy shipping lanes. Such 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.
Pressure on the Rupiah was reflected in Wednesday afternoon trading, when the domestic currency closed weaker by 127 points to 17,966 per US dollar, compared to the previous close of 17,839 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 fluctuated but still has the potential to close weaker in the range of 17,960 to 18,030 per US dollar,” he concluded.