Rupiah Projected to Weaken, Global Sentiment and Inflation in the Spotlight

JAKARTA - The rupiah exchange rate on Tuesday, February 3, 2026 is expected to weaken against the US dollar.

To note, quoting Bloomberg, on Monday, February 2, 2026, the spot rupiah exchange rate closed down 0.07 percent to Rp16,798 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) exchange rate of the Bank Indonesia (BI) closed down 0.02 percent to the price level of Rp16,800 per US dollar.

Money market observer Ibrahim Assuaibi, assessed that market movements were influenced by global sentiment, especially the decision of US President Donald Trump to nominate former Governor of The Federal Reserve (The Fed), Kevin Warsh, as a candidate to replace Jerome Powell.

According to Ibrahim, Warsh is known to be in line with Trump's views who encourages aggressive rate cuts.

"Warsh is largely considered to agree with Trump's call for a sharp cut in interest rates. However, he is also seen as critical of the Fed's asset purchase activity, which suggests that long-term monetary policy under Warsh may not be as smooth as the market initially anticipated," he said in a statement. , quoted Tuesday, February 3. .

Ibrahim added that if officially confirmed, Warsh is likely to highlight the weakening labor market as the main risk to the Fed's mandate to maintain price stability and achieve maximum employment.

"Price stability and the possibility will support more interest rate cuts if confirmed in the coming months," he said.

Jerome Powell's term of office will end in May 2026 and previously, Powell also reminded his successor not to get caught up in the dynamics of election politics.

Meanwhile, from within the country, Ibrahim said that the Central Statistics Agency (BPS) recorded Indonesia's trade balance cumulatively from January to December 2025 had a surplus of 41.05 billion US dollars or increased compared to the 2024 surplus which was recorded at 31.04 billion US dollars.

The surplus was supported by export values reaching 282.21 billion US dollars, higher than the total imports of 241.86 billion US dollars.

The trade balance surplus mainly came from the non-oil and gas sector, which recorded a surplus of US$60.75 billion, while the oil and gas balance still had a deficit of US$19.70 billion.

In addition, BPS also reported annual inflation (year on year/yoy) in January 2026 reached 3.55 percent, and this increase is reflected in the increase in the Consumer Price Index (CPI) from 105.99 in January 2025 to 109.75 in January 2026.

Based on the expenditure group, annual inflation was mainly driven by the housing, water, electricity, and household fuel group which recorded high inflation of 11.93 percent with a contribution of 1.72 percent.

Meanwhile, the commodities that contributed the most came from electricity tariffs, followed by gold and jewelry.

Ibrahim explained that the difference between annual and monthly inflation in January 2026 was due to the low base effect.

On a monthly basis, January 2026 inflation was actually recorded to experience deflation of 0.15 percent, and in January 2025, the government implemented an electricity tariff policy that suppressed CPI, causing inflation in that period to be relatively low and impacting the calculation of current annual inflation.

Ibrahim estimates that the rupiah will move fluctuatio but will close weaker on Tuesday, February 3, 2026 in the price range of IDR 16,790 - IDR 16,830 per US dollar.