FX.co ★ Rupiah Opens 2026 Lower Amid Rate-Cut Bets

The Indonesian rupiah weakened to approximately IDR 16,720 per dollar on Friday, marking the start of trading in 2026. This decline reversed the gains observed over the previous three sessions and was consistent with widespread losses across Asian currencies. Market sentiment was dampened by renewed expectations for lower domestic interest rates, following Bank Indonesia's indication of potential further rate cuts this year. This approach is aimed at bolstering growth following the late-November disaster in Sumatra, amid conditions of mild inflation. Bank Indonesia maintained its key rate at 4.75% in December for the third consecutive meeting, following a cumulative reduction of 150 basis points between September 2024 and September 2025. Throughout 2025, the rupiah depreciated by about 4%, making it one of Asia's weakest currencies. Attention will now turn to the December inflation data, scheduled for release next week, as recent figures have hovered near an 18-month high, albeit still within Bank Indonesia's target range of 1.5% to 3.5%. On a global scale, the U.S. dollar weakened to approximately 98.2, after declining by 9% in 2025. This drop was influenced by uncertainties surrounding tariffs, expectations of monetary easing by the Federal Reserve, and fiscal concerns.