Rupiah Poised to Strengthen on Weaker US Dollar

RRI.CO.ID, Jakarta - The Indonesian rupiah still has room to strengthen in the short term, supported by domestic sentiment and a weakening US dollar.

Research and Development Specialist at the Indonesia Commodity & Derivatives Exchange (ICDX), Muhammad Amru Syifa, said domestic market conditions remain relatively supportive of the rupiah’s movement.

However, market participants are awaiting the outcome of Bank Indonesia’s Board of Governors’ Meeting (RDG) scheduled for August 18–19, 2026.

“The main focus is on the direction of the BI Rate, which is expected to remain at 5.75 percent,” Amru said in a statement in Jakarta on Tuesday, August 18, 2026, as quoted by Antara.

He explained that BI’s policy stance is also under close watch, as the central bank continues to encourage credit distribution by easing banking liquidity. The measure aims to support consumption and economic growth while maintaining rupiah stability and keeping inflation under control.

Globally, the weakening US dollar is another factor supporting the rupiah. Expectations of a US Federal Reserve rate hike in September have eased after several US economic indicators pointed to a slowdown.

US retail sales and food services fell 0.6 percent month‑to‑month in July, reversing the 0.2 percent growth recorded in June and marking the first decline since October 2025. Meanwhile, the US nonfarm sector lost 23,000 jobs in July, with the unemployment rate at 4.1 percent.

According to Amru, these developments have reduced pressure on the US dollar and opened opportunities for the rupiah to strengthen further. However, geopolitical risks and rising oil prices could still limit the domestic currency’s appreciation.

“In the short term, the rupiah is expected to move within the range of IDR 17,750–IDR 17,900 per USD, with a limited appreciation trend,” said Amru. ***