Watch Out for the Surprise! Rupiah Forecast to Behave Like This in the Future

Jakarta, CNBC Indonesia - The rupiah’s exchange rate against the US dollar still has room to strengthen, according to several economists and Bank Indonesia (BI) officials. Although it has been on a weakening trend in recent days, lingering above Rp17,000 per dollar.

One confident voice regarding the rupiah’s strengthening in the medium to long term is BI’s Head of the Monetary and Securities Assets Management Department, Erwin Gunawan, based on several reference indicators.

“We are very confident that in the medium to long term, the rupiah will tend to strengthen,” Erwin said at the Central Banking Forum 2026 CNBC Indonesia in Jakarta, quoted on Tuesday (14/4/2026).

There are at least three indicators that Erwin uses to assess the rupiah’s strengthening in the medium to long term. He stated that the first is Indonesia’s still low current account deficit, currently around 0.69% of gross domestic product (GDP). This is supported by a maintained trade balance surplus.

“So when our trade balance is inefficient, a correction in the exchange rate is inevitable. However, if we have a surplus, the exchange rate will tend to strengthen,” Erwin explained.

The second indicator, he mentioned, is inflation that remains within BI’s target range throughout this year, 2.5% plus or minus 1%, with the latest figure of 3.48% released by the Central Statistics Agency (BPS) for March 2026. This controlled inflation pressure provides room for Indonesia to continue boosting economic growth, which can strengthen exchange rate stability.

“Thus, from the inflation perspective, our fundamentals indicate that rupiah stability in the context of inflation is maintained,” he elaborated.

Thirdly, foreign exchange reserves are currently around US$148.2 billion. This amount is equivalent to financing 6.0 months of imports or 5.8 months of imports and government external debt payments, and it exceeds the international adequacy standard of about 3 months of imports.

The maintained level of reserves gives BI room to maintain a foreign exchange safety net for interventions when the exchange rate weakens. This means that emergency dollar supplies domestically are still available to secure exchange rate stability.

“This is also a fundamental we use to maintain stability and facilitate all external payments: foreign exchange reserves. Our latest reserve figure is 148 billion dollars. This figure still meets 6 months of obligations for import payments,” Erwin explained.

BCA’s Chief Economist David Sumual agrees with Erwin. He stated that the rupiah is actually in a position that tends to strengthen. The recent weakening, in his view, is more due to short-term investor risk-off sentiments towards external conditions, namely the war between US President Donald Trump and Iran.

“So even though from a relative strength perspective, the rupiah actually deserves to strengthen, there are short-term issues that investors, especially portfolio ones, are looking at,” David said.

“Because for 70 consecutive months, we have actually experienced a trade surplus. Since May 2022, from the Ukraine-Russia war until now, we have seen our trade surplus strengthen. Additionally, our inflation is actually under control,” he emphasised.

However, regarding when the rupiah can strengthen against the US dollar, David noted that it will only happen if the risk-off sentiment, namely the war, ends and causes the dollar’s movement to normalise or trend downwards in the DXY index.

As is known, at the opening of the financial market trading in Indonesia yesterday, the rupiah was immediately pressured to Rp17,100 per dollar, or depreciated by 0.09% compared to last weekend’s trading. The DXY was indeed experiencing a strong surge to 99.01 based on Revinitif data at 09:00 WIB. The DXY was observed to strengthen by 0.37% at that time.

“It can’t be, for example, if the dollar strengthens by 3%, we strengthen by 10%—it can’t be like that. It seems like surfing: we manoeuvre with the waves, especially the global waves whose direction we haven’t confirmed yet,” David said.

In addition, David emphasised that in assessing the rupiah’s strengthening trend, it cannot rely solely on how much strengthening level will be achieved. Rather, it is about how strong the rupiah is in dampening volatility or fluctuations in the US dollar index.

“This is actually, when I talk with many entrepreneurs, what they primarily care about is not a certain level or threshold of the rupiah. But what they look at is the volatility. If it’s too volatile, like in South Africa where it strengthens or weakens by 4%-5%, that actually lowers their confidence in making business decisions,” David stressed.

Director of Economic Stabilisation Strategy at the Directorate General of Fiscal and Economic Strategy (DJSEF) of the Ministry of Finance, Noor Faisal Achmad, affirmed that regarding rupiah volatility, it is actually still better than other countries up to now. This is due to Indonesia’s strong macroeconomic fundamentals to support growth.

This is evident from the purchasing managers’ index (PMI) for manufacturing still at an expansion level of 50.1 in March 2026, to credit growth still reaching around 9.37% year-on-year.

“So Indonesia’s pressure is still moderate compared to peers. Rupiah depreciation is still controlled,” Faisal said at the Central Banking Forum 2026 CNBC Indonesia.

Based on Bank Indonesia’s records, the rupiah volatility index is indeed still the lowest compared to 7 other countries, at 4.75. Those 7 countries are: Indian rupee 8.92, Philippine peso 10.55, Thai baht 12.40, Mexican peso 13.20, Brazilian real 13.69, Argentine peso 14.50, and South African rand 16.34.

Rupiah depreciation or weakening is still better than many others.