Indonesian Rupiah Weakens Against US Dollar at 2026 Start

Currency Performance Analysis

The Indonesian rupiah (IDR) began 2026 on a weak note, depreciating by 0.23% to Rp16,725 per US dollar on January 2, 2026 ²

³

Source 3

https://investasi.kontan.co.id/news/awal-tahun-2026-rupiah-ditutup-melemah-ke-rp-16725-per-dolas-as

. This movement represents a reversal from the currency's sharp appreciation to Rp16,680 per dollar on December 31, 2025 ⁴

Source 4

https://pusatdata.kontan.co.id/news/kurs-rupiah-melemah-awal-2026-dolar-as-menguat-saat-likuiditas-tipis

. The rupiah's performance has been influenced by several key factors, including the Federal Reserve's monetary policy outlook and the overall strength of the US dollar in global markets.

Factors Influencing Rupiah Movement

1. Federal Reserve Policy Outlook: The release of the Federal Open Market Committee (FOMC) minutes from December showed a divided stance among Fed officials regarding future interest rate decisions ³
   Source 3

   https://investasi.kontan.co.id/news/awal-tahun-2026-rupiah-ditutup-melemah-ke-rp-16725-per-dolas-as
   .
2. Global Dollar Strength: The US dollar index rose for six consecutive trading days since December 24, 2025, reflecting sustained strength against major currencies ⁴
   Source 4

   https://pusatdata.kontan.co.id/news/kurs-rupiah-melemah-awal-2026-dolar-as-menguat-saat-likuiditas-tipis
   .
3. Asian Currency Trends: Most Asian currencies weakened against the dollar on January 2, 2026, with the Indian rupee recording the deepest fall at 0.31%, followed by the Taiwanese dollar at 0.27% ⁴
   Source 4

   https://pusatdata.kontan.co.id/news/kurs-rupiah-melemah-awal-2026-dolar-as-menguat-saat-likuiditas-tipis
   .
4. Market Liquidity: Trading activity was characterized by thin liquidity, particularly around the New Year period, contributing to the currency's volatility ⁴
   Source 4

   https://pusatdata.kontan.co.id/news/kurs-rupiah-melemah-awal-2026-dolar-as-menguat-saat-likuiditas-tipis
   .

Market Outlook

The Federal Reserve's future monetary policy decisions remain a key focus for currency traders. The Fed's latest projections indicate a more cautious approach to rate cuts in 2026 compared to the three reductions made in 2025 ⁴

. This dovish stance has contributed to the dollar's recent strength and has put pressure on emerging market currencies like the Indonesian rupiah.