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Jakarta, 5 June, 2026— Indonesia’s currency is bracing for one of its toughest years yet, with economists warning that the rupiah could weaken to Rp25,000 per U.S. dollar by the end of 2026.
The forecast reflects not only global headwinds but also domestic vulnerabilities that have eroded investor trust in Southeast Asia’s largest economy.
Escalating Projections
Economist Ferry Latuhihin has outlined a sharp depreciation path the rupiah is expected to reach Rp20,000 in June, Rp22,000 in July, and Rp25,000 by December 2026.
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He attributes the decline primarily to negative signals in Indonesia’s financial markets and a growing perception of policy uncertainty.
“The problem is trust investor,” Ferry noted, underscoring the fragile sentiment that could trigger capital flight.
Domestic and Global Drivers
Domestic pressures, policy inconsistencies and weak communication from regulators.
Concerns over fiscal sustainability amid rising subsidies. Downgrades in Indonesia’s outlook by international rating agencies.
Global factors oil prices are projected to climb to US$110–120 per barrel, straining Indonesia’s import bill.
Geopolitical tensions in the Middle East threaten energy supply chains.
The U.S. Federal Reserve’s hawkish stance continues to strengthen the dollar, amplifying pressure on emerging-market currencies.
Government’s Reassurance
Finance Minister Prasetyo Hadi insists that Indonesia’s economic fundamentals remain strong, pointing to steady GDP growth and controlled inflation.
He emphasized that the government, Bank Indonesia, and the Financial Services Authority (OJK) are coordinating closely to stabilize markets. Yet analysts argue that without credible fiscal and monetary risk mitigation, investor skepticism will persist.
Investor confidence crisis persistent doubts could accelerate capital outflows, weakening the rupiah further.
Imported inflation a weaker currency raises costs for imported goods, from fuel to consumer staples.
Rising oil prices combined with currency depreciation could widen the budget deficit.
The rupiah’s decline against the Malaysian ringgit and Singapore dollar highlights Indonesia’s relative weakness in the region.
The rupiah’s trajectory signals a systemic challenge rather than a temporary shock.
Unless decisive measures restore investor trust and stabilize fiscal conditions, Indonesia may face its weakest currency levels in history by year-end.
For households, this could mean higher living costs, while businesses grapple with shrinking margins and rising import bills.
