Rupiah Gloom Returns as 2026 Draws to a Close

TEMPO.CO, Jakarta - The rupiah’s strengthening through August and early September has proved short-lived. After recovering to about Rp17,500 against the United States dollar on September 10, the currency slipped back towards Rp18,000 last week. Its rally evaporated after barely two weeks.

The reversal underlines a more fundamental problem: little has changed domestically to provide lasting support for the currency. The rupiah therefore remains highly vulnerable to shifts in geopolitics and global financial markets.

The clearest example is its relationship with oil prices. Hopes of a reopening of the Strait of Hormuz have faded, while attacks on Saudi Arabian oil export facilities have disrupted global supplies. Brent crude has consequently surged above US$105 a barrel, dragging the rupiah lower.

For Indonesia, expensive oil means a larger dollar bill for imports. This is particularly damaging because the country recorded a US$12.5 billion current-account deficit in the second quarter. In other words, just as Indonesia is already running short of foreign currency, higher oil prices are digging the hole deeper.