Jakarta. Indonesia’s rupiah weakened further against the US dollar on Wednesday as investors awaited Bank Indonesia’s interest rate decision and closely watched President Prabowo Subianto’s speech on the country’s economic and fiscal direction amid rising global uncertainty.

The rupiah fell 37 points, or 0.21%, to Rp 17,743 per US dollar in spot trading by 9:05 a.m. Jakarta time, according to Bloomberg data. The currency had already weakened 35 points in Tuesday's trading after briefly touching Rp 17,703 per dollar. Meanwhile, the US dollar index edged up 0.05% to 99.378.

Market sentiment remained fragile ahead of Bank Indonesia’s two-day Board of Governors Meeting, where policymakers are widely expected to decide whether to raise the benchmark interest rate to support the rupiah.

At the same time, investors were monitoring Prabowo’s appearance before parliament on Wednesday, where he personally presented the government’s macroeconomic framework and fiscal policy priorities for the 2027 state budget.

Prabowo said he deliberately chose to deliver the address himself because escalating geopolitical and geo-economic tensions have created a highly uncertain global environment that could directly affect Indonesia’s economy.

“We as a nation are facing geopolitical and geo-economic challenges full of conflict, tension, and uncertainty,” Prabowo told lawmakers during a plenary session at the House of Representatives complex in Jakarta.

“Wars are happening in many places, including in Europe and the Middle East,” he said, adding that even conflicts far from Indonesia could still have significant impacts on the country’s economy and state finances.

The president said the current global situation required Indonesia’s head of state to directly communicate the government’s economic and fiscal strategy to parliament and the public.

The rupiah’s decline also came as investors assessed concerns over Indonesia’s fiscal outlook and new policy uncertainty surrounding plans to establish a state-supervised agency to manage exports of strategic commodities such as crude palm oil and coal.

Analysts at Mirae Asset Sekuritas said markets remain in “wait-and-see mode” ahead of the central bank decision, although improving fiscal deficit data has provided some relief. Indonesia’s fiscal deficit narrowed to 0.6% of GDP in the first four months of 2026 from 0.9% previously.

Still, Mirae Asset expects Bank Indonesia to hold its benchmark rate at 4.75%, contrary to market consensus forecasting a 25 basis-point hike to 5%..

The brokerage argued that raising rates may have limited effectiveness in stabilizing the rupiah because the pressure stems largely from structural capital outflows and global geopolitical risks rather than interest-rate differentials alone.

Instead, the firm expects Bank Indonesia to adopt a “hawkish hold” by maintaining rates while intensifying foreign exchange intervention, increasing issuance of Bank Indonesia Rupiah Securities (SRBI), and selectively purchasing government bonds to stabilize market yields and support confidence.

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