Rupiah Weakens After Moody’s Revises Indonesia Outlook

RRI.CO.ID, Jakarta - The Indonesian Rupiah weakened in Friday morning’s opening trade, falling 23 points or 0.14 percent to IDR 16,865 per US Dollar, compared with its previous close of IDR 16,842. The decline was largely attributed to shifting investor sentiment following a major credit rating update.

Josua Pardede, Chief Economist at Permata Bank, said the currency’s movement was heavily influenced by Moody’s Investors Service’s decision to revise Indonesia’s sovereign outlook to negative.

While the agency maintained the country’s credit rating at Baa2, one notch above investment grade, it raised concerns over policy stability. “Moody’s maintained the Baa2 rating, reflecting weakening policy predictability, rising governance issues, and uncertainties that could weigh on investor confidence,” Josua said in Jakarta on Friday, February 6, 2026, as quoted by Antara.

Moody’s cited risks stemming from increased reliance on government spending and uncertainty surrounding fiscal policy direction. However, the agency balanced this by affirming the Baa2 rating based on Indonesia’s steady 5 percent economic growth, a fiscal deficit kept below 3 percent of GDP, and a relatively low debt-to-GDP ratio.

The Rupiah’s trajectory is also being shaped by labor market data from the United States. Several indicators released for January 2026 pointed to a cooling trend.

Layoffs surged 117.8 percent year-on-year, reversing a decline of 8.3 percent in the previous month. The JOLTS Job Openings for December 2025 fell to 6.54 million from 6.93 million, while Initial Jobless Claims for the week ending January 31 rose unexpectedly to 231,000, exceeding market expectations of 212,000.

These signals suggest a softening US job market, which typically strengthens expectations for an early Federal Reserve interest rate cut and puts downward pressure on the US Dollar index.

Despite potential relief for emerging-market currencies, domestic concerns highlighted by Moody’s have kept the Rupiah under pressure. Analysts project the currency will remain within the range of IDR 16,825 to IDR 16,950 per US Dollar for the remainder of the day. ***