Rupiah Closes Weaker, US Dollar Rises to Rp17,930

The rupiah failed to maintain its positive momentum against the United States dollar in early trading on Monday. According to Refinitiv data, the rupiah exchange rate closed down 0.25% at Rp17,930 per US dollar. At the opening of morning trade, the rupiah had depreciated 0.42% to Rp17,960 per US dollar, and at one point weakened further to touch Rp17,990 per US dollar. The rupiah slowly pared its losses towards the close. This movement was a reversal from trading at the end of last week, when the rupiah had strengthened sharply by 0.53% to Rp17,885 per US dollar. Meanwhile, the US dollar index was stable at 100.43. Escalating conflict in the Middle East has increased investor caution and driven up oil prices, keeping demand for the safe-haven dollar high and limiting room for appreciation in emerging market currencies, including the rupiah. On the monetary policy front, markets still expect the US Federal Reserve to hold interest rates at its upcoming meeting. According to the CME FedWatch Tool, the probability of the Fed holding rates steady has risen to 85.6%, up sharply from 61.5% a month ago. However, the Fed’s policy direction remains clouded by differing views among its officials. Cleveland Fed President Beth Hammack on Friday joined several other officials in suggesting that rates might need to be raised to curb persistent inflationary pressures. This opens the possibility of a heated debate at the next Fed meeting, as well as the potential for a dissenting vote at only the second meeting chaired by Kevin Warsh as Fed Chair. In addition to external sentiment, the market is also awaiting the outcome of the Bank Indonesia Board of Governors Meeting, which will announce its benchmark interest rate decision on Wednesday. Bank Indonesia has raised its benchmark rate by a total of 100 basis points since May 2026. The most recent increase of 25 basis points was implemented on 18 June 2026, following an out-of-schedule meeting on 9 June to respond to pressure on the rupiah.