Rupiah Weakens on Negative Domestic Sentiment

The rupiah exchange rate at Thursday’s close weakened by 43 points, or 0.24 percent, to Rp17,995 per US dollar from the previous Rp17,952 per US dollar. Market analyst Ibrahim Assuaibi stated that the depreciation was due to negative domestic sentiment. “Market confidence in Indonesia is considered to be facing a severe test after the emergence of several negative sentiments entering the second quarter, ranging from high-level corruption cases, concerns over the government’s fiscal condition after Indonesia’s trade balance recorded a deficit in May, surging inflation, to the delay in the announcement regarding the Indonesian capital market by global index provider MSCI,” he said in a written statement in Jakarta on Thursday.

S&P Global’s release showed Indonesia’s Purchasing Managers’ Index (PMI) stood at 46.9 in June 2026, the sharpest rate of decline in a year. S&P revealed that this PMI indicates a further deterioration in the health of the goods-producing sector. “The headline figure showed a solid deterioration in factory operating conditions, one of the largest in a year. The main cause of the decline in June was a drop in demand for Indonesian manufactured goods. New orders fell for the first time in three months and at the fastest pace in a year,” Ibrahim said.

Furthermore, international rating agency Fitch Ratings estimates 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 slightly lower than the ‘BBB’ rated peers’ median of 5 months. According to Fitch, the depletion of reserves was mainly triggered by worsening terms of trade due to rising global energy prices, Bank Indonesia’s intervention in the foreign exchange market to support the rupiah, and external debt payments. Other sentiment stemmed from market attention on the release of US Nonfarm Payrolls data tonight, with expectations that the US economy added 110,000 workers, while the unemployment rate is forecast to remain unchanged at 4.3 percent. The Bank Indonesia Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened to Rp17,994 per US dollar from the previous Rp17,961 per US dollar.