Rupiah Slides to Rp 17,839 Amid Geopolitical Uncertainty
Jakarta. Rupiah closed down 34 points, or 0.19%, at Rp 17,839 per US dollar on Tuesday, according to Bloomberg spot market data. The decline came a day after the Indonesian currency had strengthened 76 points, or 0.43%, to Rp 17,805 per dollar. Meanwhile, the US Dollar Index slipped 0.1% to 99.1.
Ibrahim Assuaibi, director of Traze Andalan Futures, said external factors remained the primary driver behind the rupiah's weakness, particularly escalating geopolitical uncertainty in the Middle East.
“Conditions in the Middle East remain highly fluid. The lack of clarity surrounding US-Iran negotiations has prompted investors to remain cautious and return to safe-haven assets,” Ibrahim said on Tuesday.
Markets are closely watching developments after US President Donald Trump said talks with Iran were still ongoing, despite earlier reports suggesting Tehran had suspended indirect negotiations with Washington. The conflicting signals have added uncertainty over prospects for a diplomatic breakthrough.
Ibrahim said regional tensions involving Iran, Israel, and Lebanon have also heightened concerns over global energy supply routes. Iran has reportedly restricted some shipments to and from the Gulf region following the latest escalation, contributing to volatility in global oil prices.
Beyond geopolitics, investors are also assessing US trade policy. Ibrahim pointed to Trump's recent proclamation revising import tariffs on commodities, including copper, aluminum, and iron.
The tariff adjustments also cover several industrial equipment categories and are intended to encourage short-term investment aimed at strengthening the US manufacturing base through 2027, according to the White House.
On the domestic front, Ibrahim said Indonesia's macroeconomic fundamentals remained relatively stable, although still vulnerable to external shocks. Data from the Central Statistics Agency (BPS) showed annual inflation accelerated to 3.08% in May, while monthly inflation stood at 0.28% and year-to-date inflation reached 1.35%.
Indonesia’s manufacturing sector also showed signs of recovery. S&P Global reported that the country’s Manufacturing Purchasing Managers’ Index (PMI) rose to 50.0 in May from 49.1 in April, returning to expansion territory after a brief contraction.
The improvement was supported by stronger domestic demand and rising new orders for a second consecutive month, marking the fastest pace of growth since February. However, Ibrahim cautioned that manufacturers continue to face higher raw material costs and supply chain disruptions that are limiting production growth.
Meanwhile, Indonesia maintained its trade surplus streak in April, with the cumulative surplus for January-April reaching $5.64 billion. The result extended the country’s run of monthly trade surpluses to 72 consecutive months since May 2020, despite ongoing global economic headwinds.
Looking ahead, Ibrahim expects the rupiah to remain volatile on Wednesday, with a weakening bias.
“The rupiah is expected to trade in the range of Rp 17,840 to Rp 17,900 per US dollar,” he said.
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