Rupiah Weakening Reflects Rising Domestic Risks
The rupiah has come under relatively deeper pressure compared to regional currencies amid broadly similar global dynamics. The strengthening of the US dollar and heightened geopolitical uncertainty have indeed led to capital outflows from emerging markets. However, the rupiah’s depreciation, which exceeds the regional average, suggests that domestic factors are also playing a role.
As of April 23, 2026, the US dollar index (DXY) has strengthened by 0.32% year-to-date (YTD). Asian currencies have depreciated by an average of around 0.31% YTD, broadly in line with global trends. In contrast, the rupiah has weakened by 3.59% YTD, indicating the presence of country-specific risk.
This pressure is also reflected in domestic financial markets. Yields on 10-year government bonds have increased by 0.57% YTD, higher than the regional average of 0.26%. In the equity market, the IHSG has declined by around 14% YTD, while Asian equity markets have recorded an average gain of approximately 5.33%.
These developments suggest that the movement of the rupiah cannot be attributed solely to global factors. Indonesia even has a relative cushion as a commodity exporter and producer of some of its energy needs. The relative divergence in performance points to domestic factors that warrant attention.
In response, the Indonesian Business Council underscores the importance of a credible and well-communicated policy response. Denni Purbasari, Chief Economist of IBC, stated, “In the long term, exchange rate stability is anchored in strong national economic competitiveness relative to other countries. In the short term, however, exchange rate movements are largely driven by market expectations shaped by the direction of macroeconomic policy and how that policy is communicated.”
Looking ahead, strengthening market confidence will be essential. Addressing the key observations raised by MSCI, Fitch Ratings, Moody's, and S&P Global Ratings—particularly on policy certainty, governance, and structural reform—can serve as an important step toward improving perceptions of Indonesia’s economic outlook.
