August 31, 2026 | 11:41 am
TEMPO.CO, Jakarta - The rupiah has strengthened for two consecutive weeks, ending last week broadly stable at about Rp17,700 to the United States dollar. But Indonesia should not take too much comfort from this recovery. The latest balance-of-payments data, released last week, contain two warnings for investors. The currency’s apparent stability rests on foundations that are less solid—and considerably more fragile—than they appear.
The first concern is Indonesia’s enormous current-account deficit. In the second quarter of 2026 alone, the shortfall reached US$12.5 billion, the largest quarterly deficit in nominal terms in the country’s history.
The principal cause was the surge in oil prices following the outbreak of war with Iran. Indonesia’s oil and gas trade deficit ballooned to US$10.2 billion during the quarter. This exposes the economy’s acute dependence on imported energy. The country imports roughly 1 million barrels a day of crude oil and refined products. Any geopolitical shock that sends oil prices sharply higher will therefore pose a serious threat to the rupiah.
At the same time, the non-oil and gas trade surplus narrowed from US$15.27 billion in the first quarter to US$12.14 billion in the second. This surplus has long served as an essential cushion, offsetting the deficit generated by energy imports. That cushion is now thinning—and could eventually disappear altogether.
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