Rupiah Drops to Record Low of 18,183 per US Dollar Amid Middle East Tensions and Oil Prices

Rupiah Plummets to Historic Low Against the US Dollar

The Indonesian rupiah closed at Rp18,183 per US dollar on Wednesday, October 28, 2026, dropping 0.17% according to Bloomberg data. The currency touched an all-time intra-day low of Rp18,188 per US dollar before pulling back slightly at the close. Bank Indonesia attributed the slide to persistent geopolitical tensions, elevated global energy costs, and shifting expectations regarding United States monetary policy.

Geopolitical Pressures and Central Bank Intervention

The ongoing uncertainty surrounding the Middle East conflict has kept global oil prices elevated above $115 per barrel, according to Erwin Gunawan Hutapea, Head of the Monetary Management and Securities Asset Department at Bank Indonesia (BI), as reported by detikFinance and ANTARA News Jambi. This high energy floor increases domestic fiscal risks and strengthens market expectations of upcoming US interest rate hikes. In response, Bank Indonesia has maintained active stabilization measures through spot markets, Non-Deliverable Forwards (NDF), Domestic Non-Deliverable Forwards (DNDF), and secondary market purchases of Government Securities (SBN).

Domestic Pressures and Regional Currency Divergence

Beyond external headwinds, domestic factors added heavy downward pressure on the currency. Investor sentiment cooled due to market worries over a potential downgrade of Indonesia’s stock exchange classification by MSCI, alongside a seasonal surge in corporate foreign exchange demand at the end of the month, according to ANTARA News Jambi. While the rupiah fell 1.15% over the month of September and closed at a record low, Bank Indonesia reported that foreign exchange reserves remained stable at $146.3 billion at the end of September 2026. This depreciation places the rupiah behind several regional peers; Kontan reported that the offshore yuan and the South Korean won gained ground over the same monthly window, supported by strong export earnings and trade surpluses.

Inflationary Risks and Consumer Purchasing Power

The sustained slide in the exchange rate threatens broader economic stability by increasing import costs for energy, industrial raw materials, and consumer goods. Josua Pardede, Chief Economist at Bank Permata, noted in an interview with Kompas that prolonged rupiah weakness forces companies to absorb higher dollar-denominated costs before passing them on to consumers. This dynamic heightens inflationary pressures, especially after annual inflation reached 3.28% year-on-year in September 2026—close to Bank Indonesia’s upper target limit of 3.5%. Kompas noted that lower-income households face the steepest vulnerability, as they allocate a significant portion of their spending toward food and basic provisions.

Frequently Asked Questions About the Rupiah Depreciation

How far did the rupiah fall during the October 28, 2026 trading session?

The rupiah closed at Rp18,183 per US dollar on Wednesday, October 28, 2026, according to Bloomberg data cited by detikFinance. It touched an intra-day historic low of Rp18,188 per US dollar before the market finished.

What specific stabilization tools is Bank Indonesia using to support the currency?

Bank Indonesia executes stabilization protocols through spot market interventions, Non-Deliverable Forwards (NDF), Domestic Non-Deliverable Forwards (DNDF), and by purchasing Government Securities (SBN) in the secondary market, as detailed by Erwin Gunawan Hutapea in reports from ANTARA News Jambi.

How much were Indonesia’s foreign exchange reserves at the close of September 2026?

Bank Indonesia confirmed that the country’s foreign exchange reserves remained secure at $146.3 billion at the end of September 2026, according to detikFinance and ANTARA News Jambi.

Why are lower-income households more vulnerable to this currency decline?

As reported by Kompas, lower-income households allocate a large share of their total expenditures to food and basic goods, making them acutely sensitive to imported inflation driven by a weaker exchange rate and high energy costs.

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