KBRN, Jakarta: The Indonesian rupiah faced downward pressure in the first trading session of 2026, weakening by 38 units or 0.23 percent to reach IDR 16,725 per US dollar as of 10.34 local time on Friday, December 2, 2025.

The dip follows a strong year-end finish, as market sentiment shifts toward caution due to a volatile combination of global conflict risks and uncertain US monetary policy.

Currency analyst Ibrahim Assuaibi noted that the rupiah's decline is primarily driven by external uncertainties. While geopolitical risks appeared to subside late last year, new flares in several global hotspots have reignited fears of supply chain disruptions and energy price spikes.

Global markets are currently reacting to a series of destabilizing events across major energy-producing regions, beginning with recent strikes on Russian energy infrastructure that have sparked fears of a global energy supply crunch.

These concerns are further intensified by ongoing Middle East instability, as conflicts involving Israel-Hamas and rising tensions between the US and Iran threaten the steady flow of oil from the region.

Additionally, shifting alliances and recent political developments, such as the UAE’s plan to withdraw troops from Yemen and the tensions surrounding Venezuelan exports, have added significant layers of unpredictability to global commodity prices.

Furthermore, the Federal Reserve’s December meeting minutes revealed significant internal debate over interest rate cuts for 2026. While a 0.25 percent cut was implemented, "hawkish" concerns regarding high inflation have made investors skeptical about how much further the Fed will ease its policy this year.

On the home front, Indonesia’s economy is expected to maintain a steady growth rate of around 5 percent in 2026. However, analysts warn that stability alone is not enough to drive a full recovery. Ibrahim Assuaibi highlighted that the domestic economy still faces pressure from high food and energy prices, which continue to dampen public purchasing power.

To achieve sustainable growth, the government is encouraged to move beyond a reliance on household consumption and focus on increasing investment to create jobs.

"Indonesia's domestic economic recovery is still not optimal due to pressure on food and energy commodity prices and the public's purchasing power, which has not yet fully recovered," Ibrahim explained, as quoted by Antara.

The rupiah is expected to remain volatile throughout today's session. Analysts predict the currency will close the day with a slight weakening trend, likely finishing within the range of IDR 16,680 to IDR 16,710 per US dollar. ***