Rupiah Plummets to 17,500 Due to Global and Domestic Pressures
Permata Bank’s Chief Economist Josua Pardede stated that pressures in Indonesia’s financial markets, particularly the weakening of the rupiah exchange rate, are caused by global and domestic factors. The rupiah on Tuesday, 12 May 2026, recorded a new all-time low above Rp 17,500 per US dollar.
Josua explained that from a global perspective, the rupiah’s depreciation is triggered by energy inflation, global interest rate expectations, and US dollar demand. “Ultimately, there will be a shift or movement from investors who previously placed assets in emerging markets to safe-haven assets,” he said on Tuesday, 12 May 2026.
This situation has caused the rupiah and other Asian currencies overall to trend towards weakening. Therefore, the rupiah is not the only currency depreciating against the US dollar when considering the current global factors.
Pressure on the rupiah is not only a monetary issue but also triggered by assessments from international institutions. Among them is the Morgan Stanley Capital International (MSCI) assessment regarding ownership and the number of shares. As a result, since the beginning of the year up to April, there has been a foreign capital outflow from Indonesia’s financial markets.
In addition to MSCI, international rating agencies Moody’s and Fitch Ratings downgraded the country’s debt outlook from stable to negative at the beginning of this year. These assessments by international institutions relate to the credibility of the government’s policy mix.
A series of global risks, combined with assessments or warnings from institutions towards Indonesia, have a significant impact on the exchange rate. “Thus, this has a fairly massive impact on foreign investors’ risk appetite, particularly towards our rupiah-denominated assets,” he said.
Capital outflows from January to early May have caused the rupiah to continuously weaken. In the stock market, foreign capital exited around US$2.2 billion, and in the bond market nearly US$0.7 billion, though still supported by inflows in short-term Bank Indonesia securities.
Based on PIER records, the rupiah has weakened by 3.9 percent compared to the beginning of the year or year-to-date. Until the close of trading on Tuesday afternoon, 12 May 2026, the rupiah closed at 17,529 per US$, weakening by 115 points.