Rupiah Strengthens Amid Discussions on Budget Efficiency and Middle East Geopolitical Dynamics

Jakarta, VIVA – The rupiah exchange rate against the US dollar is predicted to remain volatile but closed weaker in trading today.

Based on data from the Jakarta Interbank Spot Dollar Rate or Jisdor BI, the rupiah rate against the US dollar stood at Rp16,993 on Monday, 30 March 2026. That position weakened by 36 points from the previous rate of Rp16,957 on Friday’s trading, 27 March 2026.

Meanwhile, in spot market trading on Tuesday, 31 March 2026 until 09.01 WIB, the rupiah was traded at Rp16,992 per US dollar. That position strengthened by 10 points or 0.06 percent from the previous position at Rp17,002 per US dollar.

Economic and money market observer, Ibrahim Assuaibi, said that the government’s plan to implement budget efficiency needs to be supported by a combination of other policies to effectively maintain the state budget deficit. The current fiscal pressures are structural, stemming from energy subsidies, rising debt interest costs, and priority spending needs.

“Therefore, budget efficiency policies cannot stand alone to keep the deficit under control, so a combination of policies is required,” said Ibrahim in his daily research on Tuesday, 31 March 2026.

In general, the government’s budget efficiency space is still adequate but limited and must be applied selectively. Realistic efficiency space only comes from non-priority spending, considering the increasingly tight spending structure, especially for energy subsidies, employee spending, and debt interest.

The implementation of budget efficiency must also ensure it meets spending quality standards, so its role is not merely savings.

Key indicators to assess the effectiveness of budget cuts include increased programme impact on the budget, improvement in the Incremental Capital Output Ratio (ICOR), shifts to productive spending, as well as stability in macro indicators such as growth above 5 percent and controlled inflation.

In addition, more even budget absorption throughout the year is also an important signal. If efficiency only results in underspending without increased output, its impact will be contractionary for the economy.

To counter those pressures, optimisation policy space through increased revenue, outcome-based spending reprioritisation, and credible financing management is deemed necessary to be implemented simultaneously with budget efficiency implementation. Without that, efficiency will only serve as a short-term buffer, while deficit pressures could rise in the second half of the year.