Rupiah Approaches Rp18,000 per US Dollar, Market Waiting for Evidence Not Just Optimism

JAKARTA - The rupiah exchange rate is again under pressure against the US dollar (USD) in Wednesday, June 3, 2021 trading.

Based on Bloomberg data as of 10.17 WIB, the rupiah was at the level of IDR17,926 per US dollar, weakening 87.50 points or 0.49 percent.

For information, on Tuesday, June 2, 2026, quoting Bloomberg, the rupiah spot exchange rate closed down 0.19 percent to Rp17,839 per US dollar.

Meanwhile, the Jakarta Interbank Spot Dollar Rate (Jisdor) of the Bank Indonesia (BI), closed up 0.11 percent to the price level of Rp17,863 per US dollar.

Head of Economist at Bank Permata, Josua Pardede, assessed the weakening of the rupiah to near the level of Rp17,900 per US dollar reflects a combination of increasingly strong global and domestic pressures, not merely influenced by seasonal factors.

According to Josua, global sentiment is still overshadowed by uncertainty over the conflict between the US and Iran, the risk of energy supply disruptions through the Strait of Hormuz, high world oil prices, and increased demand for the US dollar as a safe haven asset.

He explained that currencies in the Asian region are still very sensitive to the development of the conflict, while the surge in energy prices provides additional pressure on energy-importing countries, including Indonesia.

"This condition is very relevant for Indonesia because the import of oil, LPG, and logistics costs require dollars, so every increase in energy prices directly increases foreign exchange demand and weakens the rupiah," he told VOI, Wednesday, June 3.

However, Josua sees opportunities for strengthening the rupiah still open this month. However, this strengthening is more realistic in the form of gradual stabilization or limited strengthening, not a rapid recovery.

"The rupiah can strengthen again to the range of Rp. 17,600 to Rp. 17,750 if there are three conditions: oil prices fall more clearly due to the US-Iran peace progress, foreign flows return to SBN and SRBI, and the government gives a convincing fiscal signal," he said.

He added that on the contrary, if the price of oil rises again, the peace process will be hampered, the US dollar will strengthen, and investors will still pay attention to fiscal risks and Indonesia's external balance conditions, then the rupiah has the potential to remain in the range of Rp. 17,800 to Rp. 18,000 per US dollar.

According to him, the rupiah is currently heading into the deepest period of weakness since October 2024 due to concerns about government fiscal spending and high world oil prices, so the market needs real evidence of improvement, not just optimistic statements.

Josua added that the increase in the BI reference interest rate and various intervention measures remained an important instrument to maintain exchange rate stability. However, these efforts cannot work alone without the support of stronger fundamental factors.

He said that so far, BI has strengthened the stabilization strategy through interventions in the spot market, Domestic Non-Deliverable Forward (DNDF), foreign Non-Deliverable Forward (NDF), strengthening SRBI instruments, buying SBN in the secondary market, limiting the purchase of foreign exchange without basic transactions, and supervision of banks and corporations with large dollar needs.

Josua said that although this step was able to dampen market volatility, its effectiveness would be limited if the supply of foreign exchange from exports, export earnings (DHE), investment, and portfolio capital flows had not shown significant improvement.

"In other words, BI can dampen the turmoil, but the rupiah will be stronger on a sustainable basis if supported by improvements in the external balance and fiscal credibility," he explained.

Furthermore, Josua assessed that the current rupiah position has moved further away from its fundamental fair value.

Based on the Real Effective Exchange Rate (REER) indicator, the reasonable exchange rate of the rupiah is estimated to be below Rp17,000 per US dollar, while April 2026 data also shows that the rupiah REER fell to 91.44, indicating that the rupiah is getting cheaper in real terms.

However, he said that an undervalued condition does not necessarily guarantee a short-term recovery in exchange rates.

According to him, the currency can remain below its fair value for a fairly long period if risk sentiment is still high and the market has not obtained certainty about the direction of economic policy.

"So, the argument that the rupiah is cheap is only an excuse for potential recovery, not a guarantee of immediate recovery," he said.

To maintain exchange rate stability, Josua recommends a balanced combination of policies between the government and BI, namely the central bank needs to remain active in maintaining market stability, but does not drain foreign exchange reserves excessively just to maintain a certain level of exchange rate.

On the other hand, the government needs to accelerate the realization of DHE, strengthen the supply of foreign exchange from exports, control non-urgent energy imports, maintain fiscal communication so as not to trigger concerns regarding the budget deficit, and ensure that the policy on the export of natural resources does not create new uncertainties for investors.

"In the short term, the rupiah could possibly strengthen if seasonal pressures really ease; but in the medium term, a healthy strengthening will only occur if the market sees improved foreign exchange supply, fiscal risks under control, and government policies more consistent," he said.