Rupiah Strengthens to Rp 17,928 Despite OECD Projection on Potential Widening of Indonesia's 2026 Budget Deficit

The rupiah exchange rate against the United States dollar is predicted to remain volatile but closed weaker in today’s trading. Based on Jakarta Interbank Spot Dollar Rate (Jisdor) data from Bank Indonesia, the rupiah’s exchange rate against the US dollar stood at Rp 17,981 on Thursday, 11 June 2026. This position weakened by 10 points from the previous rate of Rp 17,971 on Wednesday, 10 June 2026. Meanwhile, in spot market trading on Friday, 12 June 2026, as of 09:01 WIB, the rupiah was transacted at Rp 17,928 per US dollar, strengthening by 60 points or 0.34 percent from the previous position of Rp 17,988 per US dollar.

Economic and money market observer Ibrahim Assuaibi stated that the Organisation for Economic Co-operation and Development (OECD) projects Indonesia’s 2026 state budget deficit will widen to touch the fiscal rule limit of 3 percent of Gross Domestic Product (GDP). This fiscal deficit estimate is higher than the government’s initial target, which set the deficit at 2.7 percent of GDP in the 2026 state budget assumptions. The projected deficit figure of 3 percent for 2026 is also an increase compared to the realised deficit in 2025, which stood at 2.9 percent of GDP. The widening deficit is primarily triggered by global commodity price pressures. Higher oil prices are expected to increase the budget deficit by 0.6 percent of GDP through increased fuel subsidy spending, if the policy of holding down subsidised fuel prices is maintained.

The OECD noted that the Indonesian government has given a strong signal to keep the deficit below the safe threshold of 3 percent of GDP. To realise this commitment, the government is believed to need to take compensatory measures or a policy mix amounting to 0.3 percent of GDP. These steps include cutting spending in other sectors, as well as the potential imposition of windfall taxes on the country’s leading commodity exporters. From a macroeconomic perspective, Indonesia’s GDP growth is projected to slow to 4.7 percent in 2026, before recovering to 5.0 percent in 2027. The slowdown in growth is influenced by rising energy costs and high policy uncertainty, which are expected to burden both consumption and investment amid a projected weakening of the labour market.