Rupiah Weakens to Rp 17,677 per US dollar as policy uncertainty takes centre stage

The rupiah weakened again against the US dollar in Friday trading. The pressure on the rupiah is driven by a mix of domestic and global factors, ranging from domestic policy uncertainty to a strengthening US economy.

Basing on market data, the rupiah on Friday morning fell 10 points or 0.06% to Rp 17,677 per US dollar, compared with the previous close of Rp 17,667 per US dollar.

Permata Bank chief economist Josua Pardede said the rupiah’s weakness this time was driven by growing investor caution about the direction of domestic policy. ‘The rupiah has depreciated against the US dollar, influenced by domestic policy uncertainty,’ Josua said on Friday (22 May 2026), quoted by Antara.

Market participants are said to be starting to eye potential new policies related to export governance that would centralise export transactions of several commodities under state-owned enterprises (BUMN).

Additionally, investors started repositioning assets ahead of MSCI’s June announcement.

US labour market data showed initial unemployment claims for the week ending 16 May 2026 fell to 209,000 from 212,000 previously. The figure was also below market expectations of 210,000.

That reading indicates the US labour market remains relatively solid.

In the manufacturing sector, early S&P Global PMI Manufacturing US rose to 55.3 in May 2026, from 54.5 previously. The reading also surpassed market expectations of 53.8.

That series of economic data reinforces the view that the US economy remains fairly solid, thus reducing market expectations of near-term monetary easing by the Federal Reserve.

According to Josua, the Iranian government stated that the latest proposal from the US is starting to narrow the gap between the two countries, generating positive sentiment in global markets.