Jakarta. The government has set a cautious exchange rate assumption of Rp 16,500 to Rp 16,900 per US dollar in its 2026 draft state budget (RAPBN). But Permata Bank’s chief economist, Josua Pardede, sees room for the rupiah to strengthen below Rp 16,000 as global and domestic conditions turn more favorable.

Pardede said the government’s conservative stance reflects lingering external risks, including the prospect of prolonged high US interest rates, expansionary fiscal policies under President Donald Trump, and rising global trade protectionism.

“These external conditions simultaneously add depreciation pressure on the rupiah and widen uncertainty, so it makes sense that the government adopts a cautious assumption,” Pardede told Beritasatu.com on Monday.

Still, he struck an optimistic tone for 2026, pointing to the likelihood of global rate cuts, stable domestic inflation, and stronger foreign capital inflows as Indonesia’s real sector and financial markets deepen.

“We estimate the rupiah could strengthen to Rp 15,700–Rp 16,000 per US dollar by the end of 2026, in line with expectations of Federal Reserve rate cuts, gradual easing of Bank Indonesia’s policy rate, and improving global risk appetite,” he said.

On the domestic front, he stressed stronger export earnings repatriation, the implementation of the Financial Sector Development Law, and the government’s target of 5.4 percent economic growth with 2.5 percent inflation as additional anchors for currency stability.

Senior economist and Associate Faculty at the Indonesian Banking Development Institute (LPPI), Ryan Kiryanto, said the government’s 5.4 percent growth target for 2026 is realistic. He projects Indonesia’s economy will expand by 5 to 5.1 percent this year, providing momentum for further acceleration next year.

“To achieve 5.4 percent growth next year, we only need an additional 0.3 to 0.4 percentage points. That is within reach,” Ryan said in a broadcast interview with Beritasatu TV on Monday.

He stressed that meeting the target will require optimal fiscal management, with the state budget serving as a key instrument to safeguard economic stability and improve social welfare.

President Prabowo Subianto earlier outlined the architecture of the 2026 state budget, which allocates Rp 3,786.5 trillion in spending against Rp 3,147.7 trillion in revenue, leaving a projected deficit of Rp 638.8 trillion, or 2.48 percent of gross domestic product (GDP).

The government said the budget will be managed prudently while maintaining a safe debt ratio, with support from the newly established sovereign wealth agency BPI Danantara Indonesia and private sector participation to drive growth.

Finance Minister Sri Mulyani Indrawati confirmed that the exchange rate assumption was based on an April agreement with parliament, but acknowledged that recent weakness in the US dollar could provide room for rupiah appreciation.