Rupiah Weakens Due to Multiple Negative Domestic Sentiments

The exchange rate of the rupiah against the US dollar closed weaker on Thursday afternoon (2/7). The rupiah corrected by 43 points, or 0.24 percent, to a level of 17,995 per US dollar, compared to the previous close of 17,952 per US dollar. Money market analyst Ibrahim Assuaibi explained that this depreciation was driven by a series of negative domestic sentiments that pressured market confidence entering the second quarter of 2026. “Market confidence in Indonesia is facing a severe test following the emergence of several negative sentiments, ranging from high-level corruption cases, concerns over the fiscal condition due to the May trade balance deficit, surging inflation, to the postponement of a capital market announcement by global index provider MSCI,” Ibrahim stated. The domestic economic condition was further pressured by the release of S&P Global data showing that Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) plummeted to 46.9 in June 2026. This figure marks the sharpest rate of decline in the past year. Ibrahim noted that the solid decline in factory operating conditions was triggered by a slump in demand for manufactured goods. New orders were reported to have fallen for the first time in three months at the fastest pace in a year. In addition to the manufacturing factor, international rating agency Fitch Ratings projected that Indonesia’s foreign exchange reserves in 2026 would only be sufficient to finance approximately 4.9 months of current external payment obligations. This figure is below the median for BBB-rated countries, which averages 5 months. The depletion of foreign exchange reserves was triggered by several main factors. From the external side, the market is currently observing the release of US Nonfarm Payrolls data. The US economy is estimated to have added 110,000 jobs, with the unemployment rate predicted to remain at 4.3 percent. In line with the movement in the spot market, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also showed a weakening to a level of Rp17,994 per US dollar from the previous position of Rp17,961 per US dollar.