Overview

Indonesia enters early April 2026 with a somewhat improved short-term external backdrop after the announcement of a temporary US-Iran ceasefire, which helped ease pressure on oil prices and supported a rebound in the rupiah. Even so, macro conditions remain fragile, as Bank Indonesia’s foreign exchange reserves continued to decline in March due to active intervention to stabilize the currency amid elevated global yields and geopolitical tension. The drop in reserves suggests that external pressure had been intense before the truce, even if BI’s approach remains focused on smoothing volatility rather than defending a fixed exchange-rate level. At the same time, domestic policy remains centered on preserving stability across the fiscal, energy, and financial systems. The government is recalibrating economic and energy policies, while state-linked institutions continue to be reshaped through Danantara’s acquisitions and broader strategic realignment. Lower oil prices following the ceasefire provide temporary relief, but downstream effects from prior energy shocks are still feeding into sectors such as aviation through higher fuel surcharges. Meanwhile, food security and stock management remain key priorities as policymakers balance geopolitical risks with domestic supply concerns. Overall, Indonesia’s near-term outlook has improved modestly, but external vulnerability, policy execution, and supply-side pressures remain central themes heading into 2Q26.