JAKARTA - The rupiah exchange rate on Thursday morning strengthened by 3 points or 0.02 percent to Rp17,941 per US dollar compared to the previous closing at the level of Rp17,944 per US dollar.
Head of Permata Bank's Economist Josua Pardede assessed that the strengthening of the rupiah was accompanied by concerns about Indonesia's fiscal outlook.
"Concerns about Indonesia's fiscal outlook have eased as global oil prices have weakened, while the government's decision to adjust the price of Pertamax fuel has also reduced pressure on the fiscal balance," he told ANTARA in Jakarta, Thursday.
This development is considered to strengthen expectations that the fiscal deficit will be more controlled, thus providing support for the rupiah and the domestic bond market.
The rupiah also continues to benefit from the increasingly strong transmission of the Bank Indonesia interest rate hike policy announced a day earlier, because the decision increases the attractiveness of the yield of domestic assets.
Looking at global sentiment, US general inflation increased to 4.2 percent year on year (yoy) in May 2026, in line with market expectations and higher than the previous month's realization of 3.8 percent yoy.
According to him, this increase marks the acceleration of general inflation for three consecutive months, mainly driven by a 23.5 percent yoy surge in energy prices amid continued tensions in the Middle East.
However, on a monthly basis, general inflation slowed to 0.5 percent month on month (mom) from 0.6 percent mom in the previous month, in line with market consensus. Meanwhile, core inflation only increased slightly to 2.9 percent yoy from 2.8 percent yoy in the previous month.
On a monthly basis, continued Josua, core inflation even slowed to 0.2 percent mom from 0.4 percent mom, lower than market expectations of 0.3 percent mom.
"These data indicate that the inflationary pressure from rising energy prices to the overall price level is not as strong as previously feared. Therefore, investors have slightly reduced their expectations for a Fed rate hike this year, although a 25 bps (basis points) rate hike in December 2026 is still fully priced in," he said.
Based on these factors, the rupiah is expected to move in the range of Rp17,900-Rp18,000 per US dollar.
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