Rupiah weakens to Rp 17,749 per US dollar as safe-haven demand rises

The Indonesian rupiah weakened by five points or 0.03% to Rp 17,749 against the US dollar on Tuesday morning compared to the previous close of Rp 17,744 per dollar. IC DX Research and Development’s Muhammad Amru Syifa said the rupiah’s weakness was due to increased demand for safe-haven assets and expectations that US interest rates will remain elevated for longer. “The rupiah is expected to fluctuate while remaining under pressure in the range of Rp 17,750 to Rp 17,800 per US dollar. The pressure on the rupiah is still influenced by the strong global US dollar amid increased safe-haven asset demand and expectations of prolonged high US interest rates,” he said in Jakarta on Tuesday (26/5/2026). The strengthening of the US dollar was reflected in the US Dollar Index (DXY) rising to 99.10. Sentiment was driven by geopolitical uncertainty regarding conflicts and negotiations between the US and Iran. Furthermore, he added, the market still sees the possibility of the Federal Reserve maintaining high interest rates due to persistent inflationary pressures in the US. Heightened geopolitical tensions in the Middle East have also led investors to reduce risk assets and shift towards the US dollar as a safe haven. “The rise in US Treasury yields and high global market volatility have further pressured emerging market currencies, including the rupiah,” Amru said. Domestic sentiment also contributed to the rupiah’s weakness, with Indonesia’s external sector resilience weakening, as reflected by a current account deficit expanding to $4.01 billion in Q1 2026 from $0.15 billion in the same period last year. “The widening deficit occurred as Indonesia’s trade surplus shrank to $7.98 billion from $13.07 billion, amid global economic slowdown and higher energy and capital goods imports, which increased demand for US dollars in the domestic market,” he said.