TEMPO.CO, Jakarta - The rupiah weakened at the close of trading on Tuesday, falling 38 points or 0.22 percent to Rp17,706 per US dollar, from Rp17,668 earlier.
Bank Woori Saudara analyst Rully Nova said the rupiah’s decline was driven in part by rising global oil prices, which remain above US$100 per barrel.
“The rupiah weakened today due to domestic factors, as the market awaits the outcome of Bank Indonesia’s Board of Governors Meeting (RDG BI), which will be announced tomorrow, as well as limited fiscal space due to rising subsidies following higher global oil prices above US$100 per barrel,” he told Antara in Jakarta on Tuesday.
Citing Anadolu, he noted that commercial oil inventories are declining rapidly, with remaining supplies only sufficient for a few weeks amid the impact of conflicts in the Middle East.
Strategic reserve releases decided in March 2026 have added around 2.5 million barrels per day, but overall stocks remain limited.
Further supply disruptions from the Strait of Hormuz have accelerated the drawdown of global inventories, raising the risk of continued price volatility.
The RDG BI is widely expected to raise its benchmark interest rate by 25 basis points to 5 percent.
“Assuming an exchange rate in the state budget (APBN) of Rp16,500, an additional Rp150 trillion in subsidies would be required, given the rising exchange rate and no increase in subsidized fuel prices,” Rully said.
Additional pressure also comes from rising US inflation expectations and continued increases in US Treasury yields.
Higher inflation expectations have pushed up US bond yields, with two-year yields at 4.105 percent, 10-year yields at 4.631 percent, and 30-year yields at 5.159 percent — the highest levels recorded in 2026 so far.
“The rupiah’s weakness is not only due to seasonal dollar demand but also declining foreign investor interest in government bonds, as yield spreads narrow compared to US Treasuries,” he added.
Meanwhile, Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened to Rp17,719 per US dollar from Rp17,666 previously.
Read: Why Is Bank Indonesia Upbeat on Rupiah Recovery by July?
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