Rupiah Ends Weaker Again as US Dollar Rises to Rp17,640

Jakarta — The rupiah reversed course to weaken against the US dollar at the close of trading on Thursday, 21 May 2026. Refinitiv data showed the rupiah finishing at Rp17,640 per US, down0.23. Throughout the day, the rupiah moved with notable volatility, opening at Rp17,600 per US, brieflysinkingtoRp17, 685perUS, before the downward pressure eased ahead of the close. The US dollar index (DXY), which measures the greenback against six major currencies, rose 0.22% to 99.308 around 15:00 WIB. The firming greenback in global markets has been one of the main drags on the rupiah today. The dollar was again sought by traders amid expectations that the Federal Reserve could raise interest rates. The minutes of the latest Fed meeting, released on Wednesday, indicated that most policymakers supported a rate hike if inflation remains above the 2% target. According to data from LSEG, markets now price in a 70% chance of a 25 basis point rate increase in December. Markets have also fully priced in the possibility of a rise no later than March 2027. On the domestic front, Bank Indonesia already took stabilisation steps by lifting the policy rate by 50 basis points to 5.25% at the RDG on Wednesday, 20 May 2026. Fakhrul Fulvian, Chief Economist at Trimegah Sekuritas Indonesia, regarded the move as appropriate and said the monetary authority does not want to be late in responding to market volatility. He noted that if BI fails to respond quickly to rupiah weakness, stabilisation costs could be much higher. ‘The decision by BI is correct. This is not just a rate hike; it is a statement that Indonesia’s policy anchor is being kept. In such a situation, BI must not delay. If delayed, stabilisation costs will be much higher,’ Fakhrul said in a statement quoted on Thursday, 21 May 2026. He views the current pressure on Indonesia as more than mere volatility, representing a phase that requires a pre-emptive monetary response. The rate hike is seen as a turning point for the rupiah after prior heavy pressure against the US dollar. He projects the rupiah could strengthen gradually to a target around Rp17,300 per US, beforemovingtowardanewequilibriumnearRp16, 800perUS. ‘The rupiah has finished its overshoot phase. With a decisive BI response, the market now has a new anchor. Rp17,300 becomes the initial stopping point, and if policy coordination proceeds well, the rupiah could move toward Rp16,800,’ he said.