Rupiah Closes Weaker at Rp17,382 per US Dollar as Market Watches Rising Debt and Middle East Conflict

JAKARTA, Jakartaweekly.com — The rupiah closed down by 49 points at Rp17,382 per US dollar in trading on Friday, May 8, 2026, from Rp17,359 per US dollar previously, amid market concerns over Indonesia’s domestic fiscal condition as well as external pressure from the strengthening US dollar.

Currency and commodity analyst Ibrahim Assuaibi said the rupiah’s depreciation against the US dollar cannot be separated from Indonesia’s government debt position as of March 31, 2026, which reached Rp9,920.42 trillion.

He noted that the debt increased by nearly 3 percent compared to the end of 2025, when it stood at Rp9,637.9 trillion.

“The government’s debt position at the end of the first quarter of 2026 was equivalent to 40.75 percent of Gross Domestic Product [GDP],” he said in a statement to reporters on Friday, May 8, 2026.

He explained that the debt-to-GDP ratio was calculated by dividing the latest outstanding debt of Rp9,637.9 trillion by the cumulative nominal GDP consisting of Q1 2026 GDP (Rp6,187.2 trillion) and the previous three quarters, totaling Rp24,341.4 trillion.

According to him, the government continues to manage debt carefully and prudently to achieve an optimal debt portfolio while supporting domestic financial market development. He added that the government is also working to improve state revenue performance to balance the rapidly growing financing needs of the state budget.

“Although the debt ratio remains relatively below the international standard of 60 percent of GDP, various international institutions are closely monitoring both the debt ratio and its interest burden relative to government revenue,” he said.

He added that the state budget deficit had reached Rp240.1 trillion, or 0.93 percent of GDP, by the end of Q1 2026. Debt financing realization also reached Rp258.7 trillion, equivalent to 31.1 percent of GDP. State revenue, particularly taxation, is considered crucial after rating agencies openly warned Purbaya regarding the ratio of debt interest payments to GDP.

Externally, pressure on the rupiah also stemmed from threats to the ceasefire between the United States and Iran, as hostilities resumed between the two countries. This situation has dashed hopes for progress regarding the reopening of the Strait of Hormuz.

The renewed conflict occurred as Washington awaited Iran’s response to the latest peace proposal, which reportedly did not address several controversial issues, including US demands to reopen the strategic waterway.

Additional pressure came from differing statements by Federal Reserve officials. Cleveland Fed President Beth Hammack said interest rates “will remain steady for some time.” Meanwhile, San Francisco Fed President Mary Daly adopted a more neutral-to-hawkish stance, reaffirming her commitment to bringing inflation back to the Fed’s 2 percent target. At the same time, Minneapolis Fed President Neel Kashkari said inflation remains too high.

In addition, markets are focusing on US April employment data, scheduled for release later tonight at 7:30 p.m. WIB. Economists forecast an increase of 62,000 jobs in April, while the unemployment rate is expected to remain stable at 4.3 percent. This report could determine the Federal Reserve’s next move regarding interest rate policy.