Indonesia’s rupiah hit a record low against the US dollar earlier this week, even as other regional currencies have strengthened. Experts point to domestic concerns weighing down the rupiah, including waning confidence in policy making and central bank independence.
SINGAPORE: Indonesian logistics entrepreneur Ilham Mualif is facing some big business changes.
The 52-year-old, whose firm handles German, Korean and Chinese imports of vehicle parts, has seen his profits shrink as foreign imports to his company fell by between 15 and 20 per cent since the start of the year.
Ilham said a weakening rupiah has prompted overseas suppliers to delay orders and raise prices on shipments already en route to Indonesia.
And while some of the higher import costs have been passed on to the Indonesian automotive buyers, his company’s freight revenue has also declined as import volumes dropped.
Ilham is a logistics provider for Indonesian automotive firms placing overseas orders.
“We felt the situation was bad enough that we had to cut and tighten expenses and postpone all our expansion plans,” Ilham said.
He is among several Indonesians CNA spoke to who are feeling the brunt of the rupiah’s decline, as the weaker currency squeezes household spending and dampens foreign imports across the country.
Indonesia’s rupiah hit a record low against the US dollar on Tuesday (Jan 20), trading at 16,985 per dollar based on spot exchange rates according to Reuters, surpassing the previous low of 16,957 recorded in April last year. The US dollar value against the rupiah was US$0.0000590, according to spot exchange rates by Bloomberg.
The currency has fallen nearly 2 per cent so far in January after dropping 3.5 per cent in 2025, placing it among the worst performing emerging Asian currencies.
The rupiah was at an all-time low since its weakest in June 1998 when it plunged from 2,800 to 16,800 per US dollar during the Asian financial crisis.
While a weaker currency could boost tourism, with visitors telling CNA that they are encouraged to upgrade their travel plans in Indonesia, businesses and economists warned that the benefits may be limited.
“Depreciation cannot be effectively leveraged as an opportunity for tourism, as it often triggers price volatility and domestic economic uncertainty,” said Eko Listyanto, deputy director at the Institute for Development of Economics and Finance (INDEF) in Indonesia.
DOMESTIC CONCERNS WEIGH DOWN RUPIAH, SQUEEZING HOUSEHOLDS, IMPORTERS
Beyond global pressures including geopolitical tensions and the United States tariffs, experts point to domestic concerns weighing on the rupiah, including rising government debt, slowing economic growth and waning confidence in policymaking and central bank independence.
The recent nomination of President Prabowo Subianto’s nephew as deputy governor of Bank Indonesia, the central bank, also sparked controversy and apprehension amongst investors, according to media reports.
“The governance of policies in Indonesia, and how the government manages fiscal matters and concerns over the independence of Bank Indonesia have raised alarm among investors,” said Mohammad Faisal, the executive director of Jakarta-based think tank Center of Reform on Economics (CORE) Indonesia.
“This has affected capital flows and in turn put pressure on the rupiah.”
Meanwhile, other regional currencies have strengthened.
The Thai baht has gained about 1.3 per cent against the dollar so far this year, while Malaysia’s ringgit reached its strongest level against the greenback in more than four years in December last year.
Economists CNA spoke to said the weaker rupiah is likely to have adverse impacts on both households and businesses, given Indonesia’s reliance on imports, such as food commodities and manufactured foods, eroding purchasing power.
“A weaker rupiah makes imported goods more expensive, reducing purchasing power and thereby, affecting business performance,” said Mohammad Faisal of CORE.
Bhima Yudhistira Adhinegara, executive director of think tank Center of Economic and Law Studies (CELIOS), said that some Indonesians may also scale back overseas spending, particularly on education and property.
Those CNA spoke to were not just cutting on overseas costs, but also scaling back at home.
As he manages losses at his logistics company, Ilham has not only slashed spending on a recent trip to Singapore to visit relatives, but also cut back on household spending and non-essential purchases such as electronics, focusing instead on daily necessities.
“My family is trying to save more. For example, last time they used Grab Food or ate outside, now they are trying to reduce it,” he said. “Demand is slow in Indonesia, people are not buying things.”
Mary Hutagol, 52, a housewife in North Sumatra’s capital Medan, said that she saw grocery prices for rice, sugar, cooking oil, fish and meat increase gradually by 30 per cent to 45 per cent since December. She has resorted to buying less.
“I started growing vegetables and rearing fish to eat at home which saves me about 30 per cent monthly. All the residents can do it,” she said
Indonesian graphic design freelancer Abigail Nathania said that she cancelled vacation plans with friends, is eating out less and has unsubscribed from monthly gaming and music streaming services to save costs.
The 24-year-old who lives in Tangerang, a city on Jakarta’s western border, feels anxious about the weakening rupiah as her income has “always been tumultuous”.
“I’ve been considering adjusting my rates for freelance work and recalculating my income in relation to the rising expenses,” she said. “With the weakening currency, I’m pivoting to look for a job with more stability.”
Nathania hopes to save up for university overseas although she worries that tuition fees will be more expensive.
“I’m even more set on going overseas so that I can start working there and earn more for my family,” she added.
Sources: https://www.channelnewsasia.com/asia/indonesia-rupiah-weaken-record-low-tourists-businesses-economy-5875991
RECORD LOW RUPIAH WEIGHS ON INDONESIANS AS COSTS RISE, IMPORTS SLOW
Indonesia’s rupiah hit a record low against the US dollar earlier this week, even as other regional currencies have strengthened. Experts point to domestic concerns weighing down the rupiah, including waning confidence in policy making and central bank independence.
SINGAPORE: Indonesian logistics entrepreneur Ilham Mualif is facing some big business changes.
The 52-year-old, whose firm handles German, Korean and Chinese imports of vehicle parts, has seen his profits shrink as foreign imports to his company fell by between 15 and 20 per cent since the start of the year.
Ilham said a weakening rupiah has prompted overseas suppliers to delay orders and raise prices on shipments already en route to Indonesia.
And while some of the higher import costs have been passed on to the Indonesian automotive buyers, his company’s freight revenue has also declined as import volumes dropped.
Ilham is a logistics provider for Indonesian automotive firms placing overseas orders.
“We felt the situation was bad enough that we had to cut and tighten expenses and postpone all our expansion plans,” Ilham said.
He is among several Indonesians CNA spoke to who are feeling the brunt of the rupiah’s decline, as the weaker currency squeezes household spending and dampens foreign imports across the country.
Indonesia’s rupiah hit a record low against the US dollar on Tuesday (Jan 20), trading at 16,985 per dollar based on spot exchange rates according to Reuters, surpassing the previous low of 16,957 recorded in April last year. The US dollar value against the rupiah was US$0.0000590, according to spot exchange rates by Bloomberg.
The currency has fallen nearly 2 per cent so far in January after dropping 3.5 per cent in 2025, placing it among the worst performing emerging Asian currencies.
The rupiah was at an all-time low since its weakest in June 1998 when it plunged from 2,800 to 16,800 per US dollar during the Asian financial crisis.
While a weaker currency could boost tourism, with visitors telling CNA that they are encouraged to upgrade their travel plans in Indonesia, businesses and economists warned that the benefits may be limited.
“Depreciation cannot be effectively leveraged as an opportunity for tourism, as it often triggers price volatility and domestic economic uncertainty,” said Eko Listyanto, deputy director at the Institute for Development of Economics and Finance (INDEF) in Indonesia.
DOMESTIC CONCERNS WEIGH DOWN RUPIAH, SQUEEZING HOUSEHOLDS, IMPORTERS
Beyond global pressures including geopolitical tensions and the United States tariffs, experts point to domestic concerns weighing on the rupiah, including rising government debt, slowing economic growth and waning confidence in policymaking and central bank independence.
The recent nomination of President Prabowo Subianto’s nephew as deputy governor of Bank Indonesia, the central bank, also sparked controversy and apprehension amongst investors, according to media reports.
“The governance of policies in Indonesia, and how the government manages fiscal matters and concerns over the independence of Bank Indonesia have raised alarm among investors,” said Mohammad Faisal, the executive director of Jakarta-based think tank Center of Reform on Economics (CORE) Indonesia.
“This has affected capital flows and in turn put pressure on the rupiah.”
Meanwhile, other regional currencies have strengthened.
The Thai baht has gained about 1.3 per cent against the dollar so far this year, while Malaysia’s ringgit reached its strongest level against the greenback in more than four years in December last year.
Economists CNA spoke to said the weaker rupiah is likely to have adverse impacts on both households and businesses, given Indonesia’s reliance on imports, such as food commodities and manufactured foods, eroding purchasing power.
“A weaker rupiah makes imported goods more expensive, reducing purchasing power and thereby, affecting business performance,” said Mohammad Faisal of CORE.
Bhima Yudhistira Adhinegara, executive director of think tank Center of Economic and Law Studies (CELIOS), said that some Indonesians may also scale back overseas spending, particularly on education and property.
Those CNA spoke to were not just cutting on overseas costs, but also scaling back at home.
As he manages losses at his logistics company, Ilham has not only slashed spending on a recent trip to Singapore to visit relatives, but also cut back on household spending and non-essential purchases such as electronics, focusing instead on daily necessities.
“My family is trying to save more. For example, last time they used Grab Food or ate outside, now they are trying to reduce it,” he said. “Demand is slow in Indonesia, people are not buying things.”
Mary Hutagol, 52, a housewife in North Sumatra’s capital Medan, said that she saw grocery prices for rice, sugar, cooking oil, fish and meat increase gradually by 30 per cent to 45 per cent since December. She has resorted to buying less.
“I started growing vegetables and rearing fish to eat at home which saves me about 30 per cent monthly. All the residents can do it,” she said
Indonesian graphic design freelancer Abigail Nathania said that she cancelled vacation plans with friends, is eating out less and has unsubscribed from monthly gaming and music streaming services to save costs.
The 24-year-old who lives in Tangerang, a city on Jakarta’s western border, feels anxious about the weakening rupiah as her income has “always been tumultuous”.
“I’ve been considering adjusting my rates for freelance work and recalculating my income in relation to the rising expenses,” she said. “With the weakening currency, I’m pivoting to look for a job with more stability.”
Nathania hopes to save up for university overseas although she worries that tuition fees will be more expensive.
“I’m even more set on going overseas so that I can start working there and earn more for my family,” she added.
Sources: https://www.channelnewsasia.com/asia/indonesia-rupiah-weaken-record-low-tourists-businesses-economy-5875991