Rupiah Closes Deeper in Decline to Rp 17,668 per US Dollar, Here are the Causes

The Rupiah exchange rate at the close of trading on Monday, 16 May 2026, weakened further to the level of Rp 17,668 per US Dollar, down from its previous position of Rp 17,597 per US Dollar.

Economic and money market observer, Ibrahim Assuaibi, stated that the Rupiah’s depreciation was influenced by increasing US inflation risks, driven by high oil prices. This has heightened expectations that the Federal Reserve (Fed) may maintain high interest rates for a longer duration.

“The prospect of tight monetary policy from the Fed is strengthening because higher energy prices have clearly slowed disinflation progress, pushing inflation further away from the Fed’s 2 per cent target,” Ibrahim said in a statement on Monday.

Furthermore, efforts to end the US-Israel conflict involving Iran appear to have stalled following an attack on a nuclear power plant in the United Arab Emirates (UAE), amid expectations that US President Donald Trump will discuss military options against Iran.

Talks held last week between Trump and Chinese President Xi Jinping were assessed to have concluded without indications of resolving the US-Iran conflict. Drone attacks in the UAE and Saudi Arabia, alongside rhetoric from both the US and Iran, have raised concerns regarding potential conflict escalation. Officials in the UAE stated they are investigating the source of the attack on the Barakah nuclear power plant and asserted that the UAE reserves the full right to respond to such “terrorist attacks.”

Domestically, the market was reportedly unsettled by statements from Indonesian President Prabowo Subianto, who noted that most people in regional areas do not use US Dollars in their daily activities, suggesting the impact is not felt as directly.

The Bank Indonesia Jakarta Interbank Spot Dollar Rate (JISDOR) also moved weaker to the level of Rp 17,666 per US Dollar, from its previous position of Rp 17,496 per US Dollar.