Rupiah Slumps, Analysts Suggest This to the Government

Pressure on the rupiah exchange rate is expected to persist amid strong external sentiment, particularly the surge in global crude oil prices and the US Federal Reserve’s maintenance of high interest rates. The rupiah exchange rate in the spot market weakened at the close of trading on Thursday (30/4/2026). The Garuda currency depreciated by 0.12 per cent to Rp17,346 per US dollar. The Fed itself announced it was holding its benchmark interest rate in the 3.5-3.75 per cent range in its latest meeting on Wednesday (29/4/2026). The decision was marked by a sharp internal division, with eight officials supporting and four opposing, making it the most split vote since 1992. Citing Reuters on Friday afternoon, Brent crude oil prices reached their highest level since March 2022, closing down $4.02 or 3.41 per cent at $114.01 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude oil also weakened by $1.81 or 1.69 per cent to $105.07 per barrel, after previously touching $110.93 per barrel. In these conditions, the government is advised to implement a moratorium or temporarily suspend the Free Nutritious Meals (MBG) programme and the Red-White Village/Urban Ward Cooperatives (Kopdes) to maintain national fiscal stability. Currency and Commodities Analyst Ibrahim Assuaibi explained that the rupiah’s weakening is caused by the rise in global crude oil prices. This surge increases the government’s need to purchase oil in US dollars. This could erode the current account balance and widen the budget deficit, considering that the budget assumptions for oil prices are only around $70 per barrel and an exchange rate of Rp16,500 per US dollar. He described Indonesia’s crude oil needs at 2.1 million barrels per day, while domestic production is only around 600,000 barrels per day. This means Indonesia still has to import around 1.5 million barrels per day. “Imagine Indonesia’s crude oil needs at 2.1 million barrels (per day), I repeat this data over and over, 2.1 million barrels per day. Domestic oil production is only 600,000 barrels,” said Ibrahim when contacted by Kompas.com on Friday (1/5/2026). He assessed that strengthening the rupiah cannot rely solely on Bank Indonesia (BI) interventions. According to him, the steps the government needs to take are to temporarily halt major programmes such as MBG, Kopdes Merah Putih, and spending on main weapon system equipment (alutsista), so that the budget can be focused on financing crude oil imports, which are currently quite high.