Rupiah Strengthens Nearly 1%, US Dollar Slides to Rp 17,875

The Indonesian rupiah opened trading on Wednesday in the strengthening zone against the United States dollar. The Garuda currency opened at Rp 17,875 per US dollar, representing an appreciation of 0.97%, according to Refinitiv data. This position brings the rupiah back below the psychological level of Rp 18,000 per US dollar, after several days spent above that threshold. The strengthening continues the positive performance from the previous session; on Tuesday, the rupiah closed 0.66% higher at the level of Rp 18,050 per US dollar. Meanwhile, the US dollar index, which measures the greenback against six major world currencies, was observed moving steadily at 99.983. In the previous session, the index recorded a 0.14% depreciation to 99.909. Market participants are still responding to Bank Indonesia’s decision to raise the benchmark interest rate by 25 basis points to 5.50% on Tuesday. The increase was decided during a Weekly Board of Governors Meeting convened to evaluate the implementation of the policy mix established during the Monthly Board of Governors Meeting. Bank Indonesia Governor Perry Warjiyo stated that the rate hike represents a follow-up measure to reinforce rupiah exchange rate stabilisation from the impact of heightened global turmoil caused by the war in the Middle East. The move is also pre-emptive to ensure that inflation in 2026 and 2027 remains within the government’s target range of 2.5±1%. “This policy is also intended to increase yields to attract foreign portfolio investment inflows into Indonesia,” he said. Perry explained that, in accordance with prevailing law and practice, Bank Indonesia holds a Weekly Board of Governors Meeting every Tuesday to evaluate policy implementation. In the evaluation since the Monthly Board of Governors Meeting on 19-20 May 2026, the rupiah exchange rate showed weaker-than-expected developments. Aside from being influenced by ongoing global turmoil and high domestic foreign exchange demand, pressure on the rupiah was also driven by foreign portfolio investment outflows from Indonesia. On the other hand, the weakening of the US dollar in global markets has opened room for appreciation for other currencies, including the rupiah. The US dollar weakened after crude oil prices fell sharply, following statements by US President Donald Trump signalling that a US-Iran deal could be reached within the coming days. Trump also mentioned that the Strait of Hormuz could be reopened soon after such a deal is signed.