Rupiah Closes Weaker, US Dollar Parks at Rp17,985

The rupiah exchange rate came under renewed pressure from the US dollar at the start of the week, closing down 0.22% at Rp17,985 per US dollar on Monday (6/7/2026). The currency opened weaker at Rp17,970 and briefly breached the psychological level of Rp18,000 during intraday trading before paring some losses.

Meanwhile, the US Dollar Index (DXY), which measures the greenback against six major currencies, strengthened 0.17% to 101.030 as of 15:00 Western Indonesia Time. The dollar’s rebound was supported by market expectations that the Federal Reserve may still raise interest rates before the end of the year, despite recent weak nonfarm payroll data and comments from Fed Chair Kevin Warsh suggesting inflationary risks have eased. Investors are now looking ahead to the release of the Fed’s meeting minutes on Wednesday (8/7/2026) for further clues on the direction of US monetary policy.

Domestically, pressure on the rupiah is being compounded by Indonesia’s trade balance, which recorded a deficit of US$1.61 billion in May 2026. This marked the end of a 72-month surplus streak that had been maintained since May 2020. Economists at Bank Central Asia (BCA) warned that export pressures could persist due to a more hawkish Fed, a potential slowdown in global demand, the mandatory B50 biodiesel programme affecting CPO export allocations, and policy uncertainty surrounding commodities such as coal and nickel. They also noted that sustained government spending could keep import demand elevated, creating a feedback loop that weakens the rupiah and may necessitate an additional 50 basis points in Bank Indonesia policy rate hikes this year.