Rupiah Strengthens After President's Speech and Bank Indonesia Rate Decision

The rupiah strengthened against the US dollar, moving away from the Rp 17,700 per dollar level on Wednesday (20 May 2026). The strengthening occurred after President Prabowo Subianto delivered a speech outlining an ambitious growth target for 2027.

According to Bloomberg, the rupiah rose 52 points or 0.29% to Rp 17,653.5 per US dollar at the close of trading on Wednesday (20 May 2026). In the previous session, the rupiah stood at Rp 17,706 per dollar.

“Markets responded positively to President Prabowo Subianto’s address to the House of Representatives, which targets economic growth of 5.8% to 6.5% in 2027,” said Ibrahim Assuaibi, an observer of currencies and commodities, in a statement on Wednesday (20 May 2026).

In his speech, Prabowo also revealed that the average growth rate of Indonesia’s economy over the past seven years has been 5 percent. However, he acknowledged that although the economy is advancing, the size of the middle class has shrunk, while the poverty rate has risen.

“In addition to economic growth, the government also targets inflation at about 1.5% to 3.5%. On the exchange rate side, the rupiah is targeted to be in the range of Rp 16,800 to Rp 17,500 per US dollar, and the 10-year Government Securities (SBN) yield at 6.5–7.3%,” he said.

In the energy sector, Indonesia’s crude oil price is assumed at USD 70–90 per barrel. Crude oil lifting is projected at 602,000–615,000 barrels per day, and natural gas lifting at 934,000–977,000 barrels of oil equivalent per day.

With regard to the state budget, next year the government targets general government revenue at about 11.82 to 12.40% of GDP, government expenditure at 13.62 to 14.80% of GDP, and the deficit kept within 1.8–2.4% of GDP. Prabowo stated, ‘we will continue to strive to reduce and narrow the deficit,’ he said.

In addition, the rupiah’s strength today was also influenced by the Bank Indonesia (BI) policy rate decision. BI was reported to have increased the policy rate (BI Rate) by 50 basis points from 4.75% to 5.25% at the May 2026 Board of Governors Meeting (RDG).

The deposit facility rate is 4.25% and the lending facility rate 6.25%. The decision ends BI’s eight-month hold on rates.

“The decision, according to BI, is intended to strengthen exchange rate stability in response to deteriorating global conditions due to the Middle East conflict and to help achieve inflation targets for 2026–2027 within a 2.5±1% range,” Ibrahim said.