JAKARTA – The Indonesian rupiah faced persistent downward pressure throughout the week, ultimately hitting a new record low. On Friday, May 15, 2026, the rupiah closed at Rp 17,597 per US dollar in spot trading, marking a 0.39% weakening from the previous day. During intraday trading, the currency even briefly touched Rp 17,602 per US dollar.
Currency observer Ibrahim Assuaibi attributed this significant weakening of the rupiah to a confluence of both external and domestic factors that have collectively weighed on the national currency.
Globally, the dominant external pressure stems from the United States’ annual inflation reaching 3.8%, its highest level since mid-2023. This upward trend in inflation fuels expectations of a more aggressive monetary policy from the Federal Reserve, consequently strengthening the US Dollar Index and exerting downward pressure on emerging market currencies.
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As Ibrahim Assuaibi noted, “US inflation is still high, and that strengthens the dollar.” This scenario naturally makes dollar-denominated assets more appealing, prompting global capital flows to gravitate towards the US and away from developing markets, including Indonesia.
Domestically, negative sentiment is fueled by concerns over a potential slowdown in the manufacturing sector, coupled with uncertainty surrounding mining royalty policies and broader perceptions of fiscal risk. Furthermore, market attention has been drawn to political responses concerning the rupiah’s depreciation, notably including President Prabowo Subianto’s public reprimand of Bank Indonesia Governor Perry Warjiyo.
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Adding another layer of complexity, Josua Pardede, Chief Economist at Bank Permata, highlighted that rising global oil prices further intensify the pressure on the rupiah. This increase has the potential to elevate domestic inflation, escalate energy subsidy burdens, and boost the demand for US dollars. Pardede summarized the situation by stating, “Global and domestic pressures make the rupiah increasingly vulnerable.”
Compounding these challenges, the latest auction results for State Securities (SBN) revealed the weakest demand recorded in over a year. This diminished interest reflects a growing perception of risk associated with Indonesian assets, compelling investors to demand higher yields and, in turn, intensifying the depreciation pressure on the rupiah.
Summary
The Indonesian rupiah reached a new record low, closing at Rp 17,597 per US dollar on Friday, May 15, 2026, marking a 0.39% weakening. This decline is largely attributed to external factors, including the US annual inflation hitting 3.8%, which strengthens the US dollar and encourages capital shifts from emerging markets. Additionally, rising global oil prices intensify pressure by potentially increasing domestic inflation and the demand for US dollars.
Domestically, concerns over a manufacturing sector slowdown, uncertainty surrounding mining royalty policies, and broader fiscal risks have contributed to negative sentiment. The weakest demand for State Securities in over a year also indicates increased risk perception among investors. These combined global and domestic pressures render the rupiah increasingly vulnerable.