Rupiah Continues to Plummet to Rp 17,905, Analysts Reveal the Root Causes
The exchange rate of the rupiah against the US dollar continues to decline. In the spot market as of 10:38 WIB, the rupiah plummeted, breaking through the level of Rp 17,905 per US dollar.
Economic and money market analyst, Ibrahim Assuaibi, stated that the weakening of the rupiah is triggered by increasing geopolitical tensions in the Middle East, which has driven up global oil prices and strengthened the position of the US dollar. “Today, the rupiah has weakened again due to the strengthening of global crude oil, with WTI at 94.58 (US dollars per barrel), and Brent crude oil also rising to 96.72,” Ibrahim said in a statement on Wednesday, 3 June 2026.
Furthermore, the deadlock in negotiations between the US and Iran has increased uncertainty in global markets. Tensions between Iran and Israel have also worsened market sentiment. Ibrahim assessed that these conditions are triggering concerns regarding the global energy supply, thereby keeping oil prices high.
He acknowledged that the rise in energy prices also has the potential to maintain inflationary pressure in the US, prompting the US central bank, the Federal Reserve, to maintain high interest rates. There is even a possibility of another interest rate hike later this year. “We see that one official from the US central bank, Hammack, stated that immediate action might be necessary if the inflation trend does not subside. This indicates a high probability of a single interest rate hike in 2026,” Ibrahim noted.
From a domestic perspective, Ibrahim assessed that high oil prices increase the demand for US dollars to fund energy imports. Additionally, the need for foreign exchange to pay dividends and maturing debt obligations is adding further pressure to the rupiah. He also highlighted the tendency of some members of the public to shift their savings into foreign currency-based instruments, which increases domestic demand for the US dollar. To mitigate the pressure on the rupiah, Ibrahim believes the government needs to maintain domestic economic stability and public purchasing power through various policies. According to him, the government must ensure the availability of goods, especially imported goods affected by the exchange rate increase, and strengthen targeted social assistance programmes.