Rupiah expected to weaken as market awaits US NFP data release

The current weakening of the rupiah is still more influenced by external sentiment. Research and Development at the Indonesia Commodity & Derivatives Exchange (ICDX), Muhammad Amru Syifa, estimates the rupiah will weaken as market participants await the release of United States Nonfarm Payrolls (NFP) data. “The current weakening of the rupiah is still more influenced by external sentiment. Market participants are waiting for the release of US Nonfarm Payrolls data, which will provide clues on the direction of the Federal Reserve’s interest rate policy,” he said in Jakarta on Wednesday. Additionally, he noted that geopolitical uncertainty in the Middle East continues to drive demand for the US dollar as a safe-haven asset, thereby putting pressure on emerging market currencies, including the rupiah. On the domestic sentiment front, the market is said to be observing the release of Indonesia’s June 2026 Trade Balance, which showed a smaller deficit than expected, as well as July inflation remaining within Bank Indonesia’s target range. Today, he conveyed that investor attention will be focused on the release of Indonesia’s second-quarter 2026 Gross Domestic Product (GDP). “If economic growth exceeds market expectations, the rupiah has the potential to gain positive sentiment as it reflects solid domestic economic fundamentals,” said Amru. In the short term, the rupiah is predicted to move in the range of Rp17,950 to Rp18,100 per US dollar. Although external pressures still dominate, the room for depreciation is predicted to be relatively limited, supported by controlled domestic inflation, positive economic growth prospects, and Bank Indonesia’s commitment to maintaining exchange rate stability. Looking ahead, he stressed that the rupiah’s direction will be influenced by the results of today’s Indonesian GDP release and the US employment data at the end of the week. “If Indonesia’s GDP is better than expected and expectations of a Fed rate hike ease again, the rupiah has the opportunity to strengthen. Conversely, if US economic data shows renewed strength, pushing the US dollar to appreciate, the rupiah still has the potential to move towards the upper limit of the projected range,” he added.