Rupiah Weakens to Rp17,718 Amid Fed Rate Policy Concerns

The rupiah against the US dollar is predicted to remain volatile but closed weaker today.

According to Jakarta Interbank Spot Dollar Rate (Jisdor) data from Bank Indonesia, the rupiah stood at Rp17,717 against the US dollar on Friday, 22 May 2026, a 44-point decline from Thursday’s 17,673.

In spot trading on Monday, 25 May 2026, until 9.11 am WIB, the rupiah traded at Rp17,718 per US dollar, down 1 point or 0.01% from the previous level of Rp17,717.

Economic and foreign exchange analyst Ibrahim Assuaibi said the rupiah’s weakness was driven by market concerns over the future direction of the US Federal Reserve’s interest rate policy.

Rising oil prices due to the Iran conflict have led investors to anticipate the Fed may raise interest rates as US inflation increases.

“The Fed could raise rates by up to 50 basis points,” Ibrahim stated in his daily research on Monday, 25 May 2026.

Fed interest rates in 2026 are likely to rise again after the US central bank unexpectedly signaled monetary tightening. This aggressive move has caused significant turbulence in global financial markets, contrary to previous market expectations.

The Federal Open Market Committee (FOMC) minutes confirmed central bank officials are prepared to take decisive action to maintain price stability. This macroeconomic policy is being implemented amid renewed geopolitical uncertainties heating up global energy distribution channels.

Market participants also worry about US-Iran negotiations mediated by Pakistan, with no clear signs of an imminent peace deal.

“The rupiah remains volatile but closed weaker in the range of Rp17,680–Rp17,800,” he added.

Additionally, global rating agencies S&P and Moody’s have rated the risks associated with the government’s strategy of centralising strategic mineral exports through the BPI Danantara export body.