Finance Minister Purbaya Yudhi Sadewa has characterized the current depreciation of the Rupiah as “unnatural,” as the currency’s value plummeted past the 17,800 mark against the U.S. Dollar by the close of trade on Wednesday, May 27, 2026.
The Minister expressed bewilderment over the weakening of the “Garuda” currency, noting that Indonesia’s economic fundamentals remain robust. “It actually doesn’t make sense. A currency usually weakens when there is a disruption in economic fundamentals,” Purbaya remarked after attending Eid al-Adha prayers at the Directorate General of Taxes headquarters in Jakarta on Wednesday.
Despite the volatility, Purbaya maintained a composed stance, asserting that the government sees no immediate need to recalibrate the assumptions of the 2026 State Budget (APBN). He explained that the impact of the weakening Rupiah had already been factored into fiscal calculations, especially after global oil prices surged to $100 per barrel following the escalating conflict between the United States and Iran.
While the slump in the Rupiah’s exchange rate initially dragged down government bond values, the Finance Minister emphasized that yields on State Debt Securities (SBN) have stabilized. This stability followed strategic interventions by the Ministry of Finance, which the “State Treasurer” believes will successfully attract foreign capital back into the Indonesian financial markets.
Under the macro assumptions of the 2026 APBN, the government targeted the Rupiah at a level of 16,500, with a ceiling of 16,800 per U.S. Dollar. To date, the Indonesian currency continues to drift significantly further away from that official target.
Market analysts had previously signaled warnings regarding this trend. Ibrahim Assuabi, Director of PT Traze Andalan Futures, predicted that the Rupiah’s decline would persist throughout this week’s long holiday, citing intense external pressures.
With the Eid al-Adha celebrations resulting in an extended domestic market closure, Assuabi noted that Bank Indonesia’s intervention capabilities are limited. “Bank Indonesia cannot intervene in the domestic, bond, or state debt markets, leaving only the international market accessible. This will inevitably lead to further depreciation of the Rupiah,” he stated on Tuesday, May 26, 2026.
According to Assuabi, the Rupiah’s sharp decline is heavily influenced by ongoing turmoil in the Middle East and the rise in global oil prices. He projects that the Indonesian currency could hit a new low of 18,000 per U.S. Dollar within the week.
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Summary
Finance Minister Purbaya Yudhi Sadewa described the Rupiah’s depreciation past 17,800 per U.S. Dollar as unnatural, asserting that Indonesia’s economic fundamentals remain strong. Despite the currency exceeding the 2026 State Budget target range of 16,500 to 16,800, the government sees no immediate need to recalibrate fiscal assumptions. The Minister explained that the impact of rising global oil prices had already been factored into the current budget calculations.
External pressures, including Middle East tensions and surging oil prices, continue to drive the currency’s decline, with analysts predicting it could hit 18,000 per dollar. Limited intervention capabilities during domestic market closures have contributed to this trend, though the Ministry of Finance remains focused on stabilizing government bond yields. Strategic measures are being implemented to maintain market stability and encourage the return of foreign capital to Indonesian financial markets.