The rupiah exchange rate against the US dollar weakened at the market open in Jakarta on Thursday (January 29, 2026), reaching around Rp16,752-Rp16,771 per dollar. This decline occurred despite issues of US government intervention in the Federal Reserve and positive market response to continued domestic stimulus programs. Analysts predict limited strengthening potential due to global and domestic factors.
At Thursday's market open, the rupiah exchange rate weakened by 30 points to Rp16,752 per US dollar from the previous Rp16,722, according to Antara News data. Meanwhile, by 09:05 WIB, it stood at Rp16,771 per dollar, down 49 points or 0.29 percent, as reported by VIVA. On the previous day, Wednesday (January 28, 2026), the rupiah strengthened to Rp16,723 from Rp16,801 on Tuesday.
Rully Nova, analyst at Bank Woori Saudara, stated the rupiah could strengthen to the Rp16,700-Rp16,750 range, influenced by the weakening dollar index and the Fed's decision to hold the benchmark rate at 3.5 percent as predicted. "The Fed's independence continues to loom and create uncertainty," he said. Fed Chair Jerome Powell emphasized that central bank independence is vital for modern democracy and acts as a barrier against the politicization of monetary policy. Powell also noted the central bank would consider rate cuts after inflation eases. However, the Fed faces threats, including a subpoena for Governor Lisa Cook over mortgage fraud allegations from President Donald Trump, as well as Trump's criticisms of Fed management and his desire to consult on interest rate decisions.
Domestically, rupiah strengthening is limited by capital outflows due to MSCI's downgrade of Indonesia's investment rating. Nevertheless, the market responded positively to Finance Minister Purbaya Yudhi Sadewa's announcement to extend four stimulus programs into 2026, such as the 0.5 percent final PPh for UMKM until 2029, PPh 21 DTP for tourism and labor-intensive industry workers, and discounts on JKK and JKM contributions for BPU. 2025 budget realization included spending of Rp3,451.4 trillion (95.3 percent), revenue of Rp2,756.3 trillion (91.7 percent), with a deficit of Rp695.1 trillion or 2.92 percent of GDP. The 10-year SBN yield fell to 6.41 percent from above 7 percent at the end of 2024, reflecting investor confidence.
