Weakening Rupiah Exchange Rate Puts Pressure on Imported Commodity Prices
The high volatility is likely to continue until the end of May.
The weakening Rupiah exchange rate against the US dollar, which has continued to fall throughout May, is putting pressure on imported raw materials, including non-subsidized fuel prices.
This condition has a significant impact on non-subsidized fuel prices, given that Indonesia has been a net oil importer since 2004.
According to economist and business expert from Hasanuddin University (Unhas), Prof. Hamid Paddu, this is because domestic production is not yet able to meet the country’s needs, which reach 1.6 million barrels per day. Meanwhile, Indonesia’s production is only 650,000 barrels per day. In other words, more than 50% of the need must be met through imports.
“Imports are of course purchased with foreign currency, in this case the US dollar. That’s why the exchange rate greatly affects fuel prices,” said Hamid, Saturday (16/5/2026).
As is known, in mid-May, the Rupiah showed a weakening trend. On May 15, 2026, the Rupiah exchange rate was at the level of IDR 17,600 per US dollar.
Hamid said that both the exchange rate and world oil prices have now exceeded the assumptions in the State Budget (APBN). In the 2026 APBN, the exchange rate assumption is IDR 16,500 per US dollar. Meanwhile, the current world oil price is US$105 per barrel, far above the APBN assumption of US$70 per barrel.
“This means that for imports, the energy burden has increased twofold. First, it increased due to world oil prices, and then due to the exchange rate,” he added.
Therefore, he said, it is very reasonable for companies, including Pertamina, to raise non-subsidized fuel prices. Moreover, Hamid predicts that the weakening of the Rupiah will continue until the end of the year.
“This is automatic because this is the market. So, the selling price of non-subsidized fuel is not intervened by the government. For the past five years, private companies and Pertamina have always adjusted non-subsidized fuel prices to market prices. So, when raw materials increase, they have to raise fuel prices,” he said.
According to Hamid, if companies, including Pertamina, do not raise non-subsidized fuel prices, it will have a very large impact on the financial condition of the state-owned enterprise. It will be very difficult for Pertamina to carry out procurement through imports with the high US dollar value.
“When buying new supplies at new prices and new exchange rates, the cost will be very high,” explained Hamid.
On the other hand, Hamid said that currently, public awareness regarding energy is good. People understand that companies like Pertamina adjust non-subsidized fuel prices.
“That’s why there have been no major reactions when non-subsidized fuel prices change. People know that non-subsidized fuel is subject to market mechanisms. If the price of raw materials increases, the fuel price will also increase,” Hamid concluded. (H-2)
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