The Indonesian Rupiah (IDR) is under significant downward pressure, with analysts warning of further depreciation despite Bank Indonesia's (BI) recent aggressive measures. In May, BI implemented a surprise 50-basis-point interest rate hike in an attempt to defend the currency, but these efforts have been undermined by ongoing domestic policy uncertainty and a challenging global environment, including elevated oil prices and rising yields in developed markets [1].
DBS Group Research has revised its forecast for the USD/IDR exchange rate, now projecting it to end 2026 slightly above 18,000, a notable increase from their previous estimate of 16,500. This revision is driven by persistent concerns over Indonesia's fiscal discipline, potential credit rating downgrades, and an ongoing MSCI review into the country's market status, all of which are contributing to capital outflows and pushing the currency toward historic lows [1].
Strategists at OCBC echo this bearish outlook, noting that the impact of BI's tightening has been diluted by shifting regulatory decisions and macroeconomic pressures. They emphasize that a durable recovery for the Rupiah is unlikely without clearer domestic policy signals and relief from external factors such as oil prices, geopolitics, and global yields [1].
Both DBS and OCBC conclude that the Rupiah will remain highly vulnerable and suppressed in the near term, with further BI tightening only likely to anchor sentiment if accompanied by improvements in domestic policy clarity and external economic conditions [1].
CONCLUSION
Analysts from DBS and OCBC forecast continued weakness for the Indonesian Rupiah, projecting the USD/IDR to reach historic highs above 18,000 by the end of 2026. Despite Bank Indonesia's aggressive rate hike, persistent domestic and global challenges are expected to keep the currency under pressure.