Editor’s note
- Rupiah sets new record on global markets: 1 dollar is worth 17,950 rupiah
- Poor financial market performance by Indonesia
- Three causes for a “perfect storm”
- Potential interest rate rise
- Market awaits clarity on commodity export regulations
Rupiah sets new record on global markets: 1 dollar is worth 17,950 rupiah
OBROLANBISNIS.com — The Indonesian economy is facing a “perfect storm,” characterized by a record-low exchange rate of the rupiah against the US dollar (17,950 rupiah) and a 31.3% drop in the Jakarta Composite Index (JCI) since the beginning of the year. This decline in the JCI makes it the weakest-performing stock index in the world.
This situation is caused by three main factors: global geopolitical tensions that have driven up oil prices, a drastic decline in the trade surplus, and obstacles to coal exports due to unclear new regulations. The impact of this situation is that Bank Indonesia may raise interest rates to stabilize the exchange rate and control inflation.
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In the future, the market awaits clarity regarding technical regulations for commodity exports and the results of the MSCI Market Accessibility Review, which will determine the direction of foreign capital flows.
Poor performance of the Indonesian financial market
The rupiah exchange rate reached a record low of 17,950 rupiah per US dollar on June 3, 2026. The Jakarta Composite Index (JCI) fell by 31.3% this year to 5,941.
This closing level of the JCI was the lowest since May 2021. The 31.3% decline made the JCI the weakest-performing stock index among more than 90 global indices.
There was a net outflow of foreign capital of 993.3 billion rupiah in a single day. Major stocks such as BBCA fell by more than 5%, BBRI by 4.6%, and AMMN plummeted by nearly 15%.
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Three triggers for the “perfect storm”
1. First trigger: Global geopolitics
Tensions between the United States and Iran, as well as problems in the Strait of Hormuz, have driven the Brent oil price up to nearly $100 per barrel ($98.9).
As a net oil importer, the rise in oil prices has increased Indonesia’s import costs, threatened the budget deficit, and driven domestic inflation up to 3.08% in May.
2. Second trigger: Domestic trade data
The trade surplus fell drastically from $3.3 billion in March 2026 to just $90 million in April 2026.
This is the lowest surplus since April 2020 and is well below market expectations. Indonesia’s foreign exchange earnings have fallen significantly. 3. Third trigger: Obstacles to coal exports
The government plans to centralize raw material exports through an agency called Danantara, but the technical regulations for implementation have not yet been published.
This uncertainty has led to administrative bottlenecks and delays in coal deliveries from Indonesia by Chinese importers, which were scheduled for June 2026.
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An analyst from the China Coal Distribution and Transportation Association stated that these centralized regulations slow down transaction processes, drive up prices, and limit supply.
Potential interest rate increase
Bank Indonesia is expected to raise the reference interest rate (BI rate) by 25 basis points to 5.5% by the end of 2026 to maintain the rupiah exchange rate and curb inflation.
An interest rate increase could potentially raise mortgage or auto loan costs and prompt companies to reconsider their business expansion. Market awaits clarity on commodity export regulations
Certainty regarding technical regulations for commodities: The market is awaiting clarity regarding commodity export regulations to restore exports and alleviate pressure on JCI.
Announcement of the MSCI Market Accessibility Review: The results of this evaluation in June 2026 will be crucial in determining whether foreign funds return to the Indonesian market or continue to leave it. ***tok
