Rupiah Strengthens, Investor Confidence Begins to Recover?

Trimegah Sekuritas Indonesia Chief Economist Fakhrul Fulvian projects the rupiah’s strengthening trend could continue towards Rp 17,500 per US dollar, driven by rising market confidence in Indonesia’s fiscal and monetary policy direction. “I estimate the rupiah still has the potential to strengthen towards Rp 17,500 per US dollar next week. The market is beginning to see that Indonesian economic authorities are willing to take the necessary steps to maintain macroeconomic stability and restore investor confidence,” Fakhrul said in a statement in Jakarta on Monday (15/6/2026). He expects the rupiah to move in a range of Rp 17,450 to Rp 17,650 per US dollar with a strengthening bias. According to Fakhrul, the current rupiah appreciation is not merely driven by short-term sentiment but is starting to be supported by improved expectations regarding Indonesia’s economic policies. Over the past few months, the rupiah has faced significant pressure due to a combination of external factors and rising market concerns over domestic policy direction. However, most of these factors are now showing signs of improvement. Fakhrul noted three key steps that are currently forming the foundation for the rupiah’s strengthening. The first is the monetary authority’s strong commitment to exchange rate stability through a cumulative interest rate hike of 75 basis points. This move sent a clear signal to the market that rupiah stability is a priority and helped increase the attractiveness of Indonesian financial assets. Second, the adjustment of fuel prices, particularly Pertamax, has begun to improve market perception of Indonesia’s fiscal condition. Although an unpopular policy, it demonstrates the government’s courage to make necessary adjustments to maintain the sustainability of the state budget. Third, efficiency measures and budget adjustments for government programmes, including the free nutritious meal programme (MBG), are being read by the market as a signal that fiscal discipline is once again a priority. “For the past few months, the market has been waiting for evidence that Indonesia is willing to undertake fiscal normalisation. Now those signals are starting to appear. Bank Indonesia has moved through interest rate hikes, while the government has begun fiscal adjustments. This combination is the foundation for the rupiah’s strengthening,” Fakhrul explained. He also noted that the market’s response to these policy changes is becoming quite tangible. Last week, the rupiah was the second-best performing currency in Asia after the South Korean won. If the fiscal normalisation process continues and policy consistency is maintained, Fakhrul sees a significant opportunity for the rupiah to be one of the best-performing currencies in the region this week. Beyond domestic factors, he assessed that global geopolitical developments could also provide additional positive momentum for the rupiah. Improving relations between the United States and Iran, along with the increased likelihood of a more permanent agreement, will help lower global risk premiums, improve sentiment towards emerging markets, and reduce pressure on global energy prices. On Monday afternoon, the rupiah closed 0.85 percent stronger at Rp 17,708 per US dollar, having briefly breached the Rp 17,600 level during the trading day.