Rupiah Weakens Amid Domestic Sentiment Pressure

TEMPO.CO, Jakarta - The rupiah exchange rate at the Thursday afternoon trading close weakened by 43 points or 0.24 percent to Rp17,995 per US dollar from the previous Rp17,952 per US dollar.

Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) also weakened today, reaching Rp17,994 per US dollar, up from Rp17,961 per US dollar the previous day.

Money market analyst Ibrahim Assuaibi stated that the weakening rupiah is due to negative sentiment from domestic sources.

"The market players' confidence in Indonesia is considered to face a significant test after the emergence of several negative sentiments entering the second quarter, starting from high-level corruption cases, concerns about the government's fiscal condition after Indonesia's trade balance in May turned into a deficit, escalating inflation, and the postponement of the announcement regarding Indonesia's capital market by the global index provider MSCI (Morgan Stanley Capital International)," he said in a written statement in Jakarta on Thursday, July 2, 2026, as quoted from ANTARA.

According to a release from S&P Global, Indonesia's Purchasing Managers' Index (PMI) was 46.9 in June 2026, marking the most significant decline in a year.

S&P revealed that Indonesia's PMI showed a continued decline in the health of its goods production sector.

"The headline indicates a substantial decrease in factory operational conditions, one of the most significant in a year. The main reason for the decline in June was the decrease in demand for goods manufactured in Indonesia. New orders fell for the first time in three months and at the fastest rate in a year," Ibrahim said.

Subsequently, the international rating agency Fitch Ratings estimated that Indonesia's foreign exchange reserves could only finance around 4.9 months of its current external payment needs in 2026. This figure is slightly lower than the median for BBB-rated countries, which is five months.

According to Fitch Ratings, the depletion of foreign exchange reserves is mainly triggered by the deteriorating terms of trade due to the rise in global energy prices, Bank Indonesia's intervention in the foreign exchange market to support the rupiah, and the payment of foreign debts.

Other sentiments arise from market concern over the release of U.S. nonfarm payroll data on Thursday night. Expectations are that the U.S. economy will increase its workforce by 110,000, while the unemployment rate is predicted to remain unchanged at 4.3 percent.

Read: Analyst Explains Why Rupiah Could Weaken Past Rp18,000 Next Week

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