Rupiah strengthens following positive report from S&P Global Ratings
The rupiah exchange rate against the US dollar strengthened at the close of trading on Tuesday afternoon, gaining 18 points or 0.10 percent to Rp18,091 per US dollar from the previous Rp18,109 per US dollar.
Money market analyst Ibrahim Assuaibi assessed that the rupiah’s strengthening was influenced by a positive response after S&P Global Ratings projected Indonesia’s economic growth would reach 5 percent per year over the next three years, despite rising fuel prices.
‘The rating agency maintained Indonesia’s credit rating in the investment-grade BBB category with a stable outlook,’ he said in a written statement in Jakarta on Tuesday.
S&P stated that Indonesia’s credit rating remains at BBB thanks to strong economic growth prospects. This is reflected in prudent macroeconomic policy settings, as well as external and government debt burdens that are relatively lighter compared to other BBB-rated countries.
Economic growth is being driven by fiscal spending and downstreaming policies. S&P assessed that the government’s policies related to downstreaming and strengthening control over mineral resources have the potential to boost revenue growth and export earnings.
Even though Indonesia’s economic growth reached 5.6 percent in the first quarter of 2026, it was accompanied by turmoil in the financial markets during the first half of 2026. The stock market was the most pressured, losing more than 30 percent of its market capitalisation, while the rupiah exchange rate also fell by around 7 percent against the US dollar over the same period.
‘For this year, S&P projects Indonesia’s economy to grow by 5.1 percent, in line with the potential for moderating economic growth in the coming quarters. This is due to continued external uncertainty and high domestic interest rates,’ Ibrahim stated.
Turning to global sentiment, US President Donald Trump is set to reimpose a naval blockade on Iran following renewed military exchanges with Tehran. Trump also said Washington would impose a 20 percent fee on cargo passing through the Strait of Hormuz to cover security costs.
The US military announced the blockade would begin on Tuesday (14 July), targeting Iran-linked shipping traffic while allowing neutral commercial shipments to continue passing through the waterway.
‘Investors remain concerned that further military escalation or retaliatory actions could disrupt flows from the Gulf, through which about one-fifth of global oil consumption passes, after Iran launched drone attacks on US assets in Kuwait and struck a vessel in the Strait of Hormuz with a cruise missile,’ he said.
The US military action is seen as potentially triggering further attacks by Iran that could affect regional energy infrastructure, thereby potentially raising crude oil prices and impacting broader financial markets, pressuring stocks and heightening inflation concerns as investors reassess the potential impact of rising energy costs on global growth and central bank policy.
Another sentiment came from Federal Reserve Governor Christopher Waller, who stated that if the Consumer Price Index (CPI) rises this week, the Fed must consider raising interest rates. Waller said that a high core inflation figure ‘would force consideration of a rate hike in the near term.’
‘Despite his hawkish stance, he still sees the possibility of inflation reaching the 2 percent target without a rate hike and stated that the labour market is closer to the Fed’s maximum employment target,’ Ibrahim said.
The Bank Indonesia Jakarta Interbank Spot Dollar Rate (JISDOR) also strengthened on Tuesday, moving to Rp18,099 per US dollar from the previous Rp18,131 per US dollar.