Rupiah under pressure as dollar strengthens
The rupiah is expected to face continued pressure in the coming weeks as the US dollar strengthens globally. The dollar index’s projected upward movement further signals potential for further appreciation of the US currency.
Currency and commodities analyst Ibrahim Assuaibi stated that the dollar index could range between 98.100 and 101.00 in the coming week.
“There’s a high possibility it will widen from the 98.100 to 101.00 range for the dollar index,” he said in a statement on Sunday (31 May).
He viewed this movement as a signal that the dollar is likely to continue strengthening. “From this, it’s clear the dollar may再度 strengthen,” Ibrahim said.
Besides the dollar, Ibrahim highlighted the expected widening price range for West Texas Intermediate (WTI) crude oil, projected between $84.600 and $99.400 per barrel.
Meanwhile, the rupiah is projected to weaken to 18,150 per US dollar in early June, driven by a combination of global factors affecting the market.
According to Ibrahim, fluctuations in the dollar, oil, and global gold prices are tied to ongoing geopolitical tensions. “This is heavily influenced by Middle East geopolitics,” he said.
He explained tensions in the Strait of Hormuz over nuclear negotiations between the US and Iran, particularly unresolved uranium enrichment issues. “The US says a deal is possible, but Iran says there’s no agreement,” he stated.
The uncertainty, he added, is disrupting global trade routes. The UK’s maritime trade body has issued warnings about military activities in the region. “This is causing transportation bottlenecks, keeping inflation high,” Ibrahim said.
Persistent high inflation, he noted, would likely lead the US Federal Reserve to maintain high interest rates, possibly raising them again.
“Global central banks may also raise interest rates,” he added.
These conditions, Ibrahim continued, are key drivers of global dollar strength. Meanwhile, a decline in gold prices presents opportunities for central banks to accumulate reserves.
He added that global geopolitical tensions, from the Russia-Ukraine conflict to Middle East disputes, are expected to persist long-term until 2027, maintaining high market volatility.
Meanwhile, global gold prices closed at $4,539 per troy ounce, with domestic prices around Rp2,799,000 per gram.
Ibrahim outlined potential gold price scenarios: if global prices correct to $4,434 per troy ounce, domestic prices could drop to around Rp2,779,000 per gram; if they fall further to $4,301, domestic prices may reach Rp2,679,000 per gram.
However, if gold prices rise to the first resistance level of $4,642 per troy ounce, domestic prices could reach Rp2,819,000 per gram. “If global gold prices increase further to the second resistance at $4,768 per troy ounce, domestic prices may hit Rp2,919,000 per gram,” he said.
The rupiah’s persistent pressure, having breached the Rp17,800 per dollar level, has drawn serious concern from experts.
Bank Indonesia (BI) has responded to recent rupiah developments, particularly during the Iduladha 1447 H holiday period.
The rupiah showed positive performance in Friday’s (29 May 2026) trading session.
The rupiah opened stronger today, 29 May 2026, at Rp17,827 per US dollar.
Finance Minister Purbaya Yudhi Sadewa affirmed the state budget remains robust despite the dollar reaching Rp17,830, with worst-case scenarios prepared for rupiah depreciation.
Analysis of potential Strait of Hormuz developments’ impact on US dollar and euro exchange rates amid global geopolitical uncertainty.
The Bloomberg Dollar Index fell 0.2% following reports of a 60-day MOU between the US and Iran regarding ceasefire and Strait of Hormuz access.
The rupiah is expected to remain under pressure and could soon reach Rp18,000 per US dollar.
Rupiah stabilisation efforts are deemed insufficient without synchronised fiscal and monetary policies.
The rupiah’s exchange rate is said to be bearing excessive economic pressure, with today’s depreciation exceeding fundamental conditions.