Rupiah Stability Hinges on Fragile Foundation

The Indonesian rupiah has seen two consecutive weeks of strengthening, ending last week at around Rp17,700 against the US dollar.

However, this apparent stability is underpinned by a fragile foundation, according to recent balance-of-payments data.

The data reveals a massive current-account deficit of US$12.5 billion in the second quarter of 2026, the largest quarterly deficit on record.

This shortfall was largely driven by a surge in oil prices following Indonesia's war with Iran, which resulted in an oil and gas trade deficit of US$10.2 billion.