Rupiah Projected to Weaken amid Global Geopolitical Pressure

JAKARTA - The rupiah exchange rate on Tuesday, January 5, 2026 is expected to weaken against the US dollar.

Citing data from Bloomberg, Friday, January 2, 2025, the spot rupiah exchange rate closed down 0.23 percent to Rp16,725 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of the Bank Indonesia (BI) closed down 0.03 percent to the price level of Rp16,725 per US dollar.

Doo Financial Futures analyst Lukman Leong said the rupiah has the potential to weaken against the US dollar as geopolitical concerns increase after the arrest of Venezuelan President Nicolás Maduro.

He added that the situation was putting pressure on investors' risk appetite and negatively impacting risky assets, including emerging market currencies.

"The rupiah is expected to weaken against the US dollar after the arrest of Venezuelan President Nicolás Maduro triggered geopolitical concerns that put pressure on investor interest in risky assets, including emerging market currencies," he explained to VOI, Monday, January 5.

Lukman estimates that the movement of the rupiah on Monday, January 5, 2026 will be in the range of Rp16,650-Rp16,800 per US dollar.

Meanwhile, money market observer Ibrahim Assuaibi, revealed that the minutes of the December Federal Open Market Committee (FOMC) meeting released showed differences of opinion within The Fed.

According to him, a number of Federal Reserve officials believe that interest rates should be maintained for a while after three cuts throughout 2025.

"However, some policymakers judged that it would be appropriate to maintain further rate cuts if inflation declined over time," he said.

On the geopolitical side, global tensions also overshadowed market movements, namely Russia and Ukraine accusing each other of attacking civilians on New Year's Day, despite intensive diplomatic efforts led by US President Donald Trump to end the conflict that has lasted nearly four years.

"Kyiv has stepped up attacks on Russian energy infrastructure in recent months, with the aim of cutting off Moscow's funding source for its military campaign in Ukraine," he said.

In addition, Ibrahim said the Trump administration had increased pressure on Venezuela by imposing sanctions on four companies and oil tankers that were considered to be involved in the country's energy sector.

According to him, tensions have also increased in the Middle East, following Saudi Arabia's air raids in Yemen as well as Iran's statements regarding the possibility of a full-scale war with the US, Europe, and Israel.

He added that this situation increases concerns about regional instability, while President Trump warned of further action if Iran continues to rebuild its nuclear program.

Ibrahim estimates that the rupiah will move fluctuatio but within the price range of Rp16,720 - Rp16,750 per US dollar.