Analyst Warns Rupiah Could Weaken Beyond Rp 18,000 per Dollar This Month
Jakarta. The Indonesian rupiah could weaken beyond Rp 18,000 against the US dollar this month as rising oil prices and escalating geopolitical tensions continue to pressure emerging-market currencies, currency analyst Ibrahim Assuaibi said on Wednesday.
Earlier in the day, the rupiah fell to a fresh record low above Rp 17,600 per dollar, driven by surging crude oil prices and ongoing instability in the Middle East, according to Ibrahim.
He warned that the rupiah may continue to weaken in the near term if pressure from the stronger US dollar, elevated oil prices, and geopolitical tensions does not ease.
“There is a strong possibility that Rp 18,000 will be breached during trading this May,” Ibrahim said.
“The dollar is strengthening sharply today, while oil prices are also rising, and both are contributing to the rupiah’s weakness,” he added.
Oil prices climbed after US President Donald Trump claimed that China had agreed to purchase crude oil from the United States following his meeting with Chinese President Xi Jinping in Beijing.
The development added pressure on the rupiah because Indonesia remains heavily dependent on imported crude oil.
Ibrahim said higher oil prices were also being fueled by rising tensions in the Middle East, particularly after Iran conducted large-scale military exercises near the Strait of Hormuz, a critical route for global oil shipments.
Any disruption in the area could significantly affect global energy prices, he said.
Market uncertainty also intensified after an Indian cargo vessel traveling from Africa to the United Arab Emirates reportedly sank off the coast of Oman last Wednesday, raising concerns about the security of shipping and energy trade routes in the region.
Amid the mounting pressure, Ibrahim said Bank Indonesia should continue intervening in the foreign exchange market to maintain rupiah stability.
Beyond external pressures, he also highlighted Indonesia’s energy subsidy burden as another factor weighing on the currency.
According to Ibrahim, Indonesia’s large crude oil import requirements -- much of which are used to support subsidized fuel programs -- continue to increase demand for U.S. dollars.
“The large budget burden for subsidizing crude oil is one of the causes of the rupiah’s weakness,” he said.
He warned that pressures could intensify further if oil prices continue rising while Indonesia’s energy import dependence remains high.
“Out of the 1.5 million barrels of crude oil imported, around 85% is used for subsidized public fuel consumption,” Ibrahim said.
Tags: Keywords:Related Articles
Rupiah Slides Back Above 18,000 per Dollar After Perry Warjiyo Resigns
The rupiah weakened beyond 18,000 per dollar as investors assessed the surprise resignation of Bank Indonesia Governor Perry Warjiyo.
Suharto-Era Finance Minister Says Current Rupiah Weakness Is Not a Repeat of 1998
“The situation today is very different from 1998. Back then, GDP growth had already fallen to negative 13%,” Fuad said.
Rupiah’s Sharp Decline Prompts Surprise Rate Hike, Governor Says
Bank Indonesia raised its benchmark interest rate to 5.50% after the rupiah weakened more sharply than policymakers had anticipated.
Finance Minister Expects Rupiah to Recover to Rp 16,800–17,500 Range in 2027
Indonesia expects the rupiah to strengthen in 2027 as policymakers seek to preserve economic and financial-market stability.
Weak Rupiah, Higher Airfares Push Up Umrah Travel Costs in Indonesia
A weaker rupiah and higher airline costs are driving up umrah package prices, though demand among Indonesian pilgrims remains resilient.
Gov't Deploys Rp 8 Trillion in Bond Market as Rupiah Weakens Beyond Rp 18,000 a Dollar
Indonesia injected Rp 8 trillion into the bond market as authorities moved to stabilize the rupiah after it weakened past Rp 18,000.
Bank Indonesia Pushes De-Dollarization Efforts as Rupiah Nears Rp 18,000 Per Dollar
Bank Indonesia is expanding local currency settlement cooperation as the rupiah weakens toward Rp 18,000 per dollar.
Rupiah Weakness Has Become Excessive, Indonesian Economist Warns
The rupiah has weakened beyond what the country’s long-term economic fundamentals justify.
Rising US Treasury Yields Add Pressure on Rupiah, Economist Says
Higher US Treasury yields and rising investor concerns over Indonesia are adding pressure on the rupiah, an expert says.
Indonesia Cuts Dollar Purchase Limit to $25,000 to Defend Rupiah Effective in June
Indonesia will halve the limit for dollar purchases without underlying transactions as authorities seek to stabilize the rupiah.The Latest
Prabowo Says South Korea's Lee Asked Indonesia to Help Open Dialogue With North Korea
President Prabowo Subianto says South Korea's Lee Jae Myung asked Indonesia to help open dialogue with North Korea.
Pullman Hotel Fire in Jakarta Suspected to Stem From Electrical Fault
Police will deploy a forensic team to investigate a fire at Pullman Hotel in West Jakarta, with an electrical fault suspected as the cause.
Pertamina Slashes Prices of Three Fuels From Aug. 1
Pertamina cut prices for three non-subsidized fuels from Aug. 1.
Trump Too Stubborn to Rejoin Paris Agreement: Indonesian Minister
Indonesia's Environment Minister Jumhur Hidayat says other countries should deal with Trump quitting the Paris Accord.
Indofood Sales Rise 9% as Rupiah Weakness Hits First-Half Profit
Indofood’s first-half sales rose 9%, but net profit fell 19% as rupiah weakness increased unrealized foreign-exchange losses.Most Popular
