Rupiah Weakens Due to Multiple Negative Domestic Sentiments
The exchange rate of the rupiah against the US dollar closed weaker in Thursday (2/7) afternoon trading. The rupiah corrected by 4D3 points or 0.24 per cent to the 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 weakness was driven by a series of negative domestic sentiments that have pressured market participant confidence entering the second quarter of 2026.
“Market participant confidence in Indonesia faces a heavy test following the emergence of several negative sentiments, ranging from high-level corruption cases, concerns over fiscal conditions due to the May trade balance deficit, surging inflation, to the delay in the capital market announcement by global index provider MSCI,” Ibrahim stated in a written report.
Domestic economic conditions are under increasing pressure following the release of S&P Global data, which showed Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) slumped to the 46.9 level in June 2026. This figure recorded the sharpest decline in the last year.
Ibrahim noted that the solid decline in factory operational conditions was triggered by a plunge in demand for manufactured goods. New orders were reported to have fallen for the first time in three months at the fastest rate in a year.
In addition to manufacturing factors, international rating agency Fitch Ratings projects that Indonesia’s foreign exchange reserves in 2026 will only be able to finance approximately 4.9 months of current external payment needs. This figure is below the median for BBB-rated countries, which averages around 5 months.
The depletion of foreign exchange reserves is driven by several key factors. From an external perspective, the market is currently closely monitoring the release of US Nonfarm Payrolls data. The US economy is expected to add 110,000 jobs, with the unemployment rate predicted to remain at 4.3 per cent.
In line with movements in the spot market, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also showed weakness to the level of Rp17,994 per US dollar from its previous position of Rp17,961 per US dollar.