Rupiah Forecast: Trading Range Projected at Rp17,250–Rp17,500 Through Late May

The Indonesian Rupiah (IDR) exchange rate continues to face pressure, yet its depreciation is expected to be more controlled this week. This anticipated stability comes amid active intervention by Bank Indonesia (BI) and the increasingly limited scope for further strengthening of the US Dollar (USD).

According to Bloomberg data, the Rupiah recorded a new low in the spot market, closing at Rp 17,394 per US Dollar at the end of trading on Monday, May 4, 2026. This marked a 0.33% weakening compared to its close last week at Rp 17,337 per US Dollar.

Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE) Indonesia, suggests that the Rupiah’s movement this week will remain in a phase of relatively controlled weakening. “While the general trend is still depreciation, it won’t exhibit the sharp surges witnessed between March and April,” Yusuf explained to Kontan.co.id on Monday, May 4, 2026, offering a more nuanced perspective on the currency’s trajectory.

Several critical factors are poised to prevent the Rupiah from experiencing extreme depreciation in the immediate future. Technically, the level of Rp 17,346 per US Dollar acts as a significant psychological threshold for the market. Whenever the Rupiah approaches this mark, Bank Indonesia intensifies its interventions across various fronts, including the spot market, domestic non-deliverable forward (DNDF) transactions, and purchases in the secondary market for Government Securities (SBN). This proactive strategy has proven effective in curbing excessive weakening or “overshooting.”

Concurrently, the strengthening momentum of the US Dollar appears to be tapering off externally. Unless significant surprises emerge from key economic data such as ISM Services or the outcome of the Federal Open Market Committee (FOMC) meeting, the dollar’s upward potential is perceived as limited, contributing to a more stable environment for the Rupiah.

Furthermore, the declining market liquidity in Asia ahead of upcoming holiday periods is prompting market participants to adopt a more cautious stance. Under these prevailing conditions, the Rupiah is expected to trade within a range of Rp 17,280 to Rp 17,400. While there’s a possibility of touching Rp 17,400 upon the release of FOMC minutes, the likelihood of breaking through to a new weakest record remains constrained, absent a significant market catalyst, as noted by Yusuf.

Yusuf also highlighted potential new risk scenarios, specifically a shift in The Fed’s policy towards a more hawkish stance than anticipated, or a geopolitical escalation in the critical Strait of Hormuz. These events could significantly alter the Rupiah’s current trajectory.

Rupiah Projections Until End of May 2026

Looking further ahead, Yusuf outlines three distinct scenarios for the Rupiah’s performance until the end of May 2026. The primary scenario predicts the Rupiah trading within the range of Rp 17,250–Rp 17,500, characterized by a gradual weakening trend. This outlook is predicated on several assumptions: global oil prices remaining elevated but stable, The Fed’s policy maintaining interest rates without additional tightening signals, and Bank Indonesia actively working to preserve exchange rate stability.

In a more optimistic scenario, the Rupiah could strengthen below Rp 17,250. This positive shift would hinge on a de-escalation of geopolitical tensions and a significant decline in oil prices, particularly if the market begins to anticipate future interest rate cuts by The Fed.

Conversely, a risk scenario could see the Rupiah’s weakening persist beyond Rp 17,500, potentially approaching Rp 17,800. This adverse outcome would largely depend on a worsening of the Middle East conflict, which could trigger a sharp spike in global oil prices and ripple effects across financial markets.

Overall, Yusuf forecasts the Rupiah’s equilibrium point by the end of May to be in the range of Rp 17,350–Rp 17,450 per US Dollar. While pressure on the currency remains palpable, it is not expected to be in an accelerating phase, suggesting a more managed decline.

Factors Pressuring the Rupiah

The persistent pressure on the Indonesian Rupiah stems from a complex interplay of both external and domestic factors. Globally, the ongoing conflict in the Middle East remains a primary source of uncertainty, directly impacting energy distribution and global oil prices. As a net oil importer, Indonesia is particularly vulnerable; heightened energy import requirements necessitate greater foreign exchange, potentially widening the nation’s current account deficit.

Monetarily, the sustained high interest rates in the US contribute significantly by narrowing the yield differential between Indonesian and US assets. This diminishes the attractiveness of Rupiah-denominated assets for global investors, leading to capital outflows or reduced inflows.

Domestically, investor risk perception also plays a crucial role. Governance issues within investment institutions, such as Danantara, have made foreign investors more cautious. Additionally, expectations of high fiscal spending without robust consolidation add to the risk premium associated with Indonesian assets. Furthermore, the recent decline in foreign exchange reserves over the past few months, coupled with reduced foreign ownership of Government Securities (SBN), clearly indicates that global investor interest in Rupiah assets has yet to fully recover.