When the Indonesian rupiah surpassed IDR 18,000 per US dollar and the Jakarta Composite Index (JCI) fell to its lowest level in several years, the market was sending a message that went beyond ordinary daily volatility. On June 8, 2026, the rupiah briefly reached around IDR 18,105 per US dollar, while the JCI dropped to 5,342, declining by 4.52 percent. These developments reflected growing concerns about policy direction, external resilience, and confidence in Indonesia’s economy. The phrase “Sell Indonesia” also began to gain traction among global investors.
History shows that movements in the rupiah have consistently been shaped by a combination of global pressures and domestic conditions. During the 1997–1998 crisis, the currency collapsed due to high levels of foreign-currency debt, a fragile banking sector, and political and social instability. In 2008, pressure came from the global financial crisis. In 2013, the taper tantrum demonstrated how quickly foreign capital could leave emerging markets when returns in the United States became more attractive. Today, the pressure stems from a combination of geopolitical conflicts, elevated oil prices, a strong US dollar, high US Treasury yields, seasonal demand for foreign exchange, and growing doubts about domestic conditions.
Under these circumstances, the rupiah cannot be stabilized through interest-rate increases alone. Bank Indonesia must remain decisive, but government fiscal policy must also be credible. Currency stability requires fiscal discipline, clear policy coordination, healthy foreign-exchange inflows, and regulatory certainty. Without these elements, increases in the BI Rate serve only as short-term relief rather than a solution to the underlying problem.
The 50-basis-point increase in the BI Rate to 5.25 percent in May 2026 was part of efforts to stabilize the rupiah amid global volatility and maintain inflation within its target range. In addition to raising interest rates, Bank Indonesia strengthened foreign-exchange interventions, enhanced the attractiveness of Bank Indonesia Rupiah Securities (SRBI), expanded the use of Domestic Non-Deliverable Forwards (DNDF), and promoted local currency transactions. These measures reflected the central bank’s active commitment to preserving financial stability.
However, markets evaluate more than policy instruments. They also assess policy credibility. Indonesia’s foreign-exchange reserves stood at USD 146.2 billion at the end of April 2026, equivalent to 5.8 months of imports. SRBI instruments also helped attract foreign portfolio inflows during the second quarter. Nevertheless, portfolio capital remains highly sensitive to shifts in sentiment and global conditions. As a result, stability that relies primarily on short-term instruments may appear strong on the surface while remaining vulnerable to greater pressures.
In this environment, the government must strengthen market confidence through transparent and credible fiscal management. Markets do not oppose large-scale public spending when its objectives, financing sources, risks, and economic impacts are communicated clearly. Social programs, infrastructure projects, food security initiatives, energy development, and industrialization efforts can continue to expand, provided they are supported by disciplined and sustainable fiscal governance. Confidence in the state budget remains a key pillar of currency stability.
In addition, the government and Bank Indonesia need to strengthen foreign-exchange inflows from the real sector. Export earnings from natural resources should not only be required to remain onshore but should also be supported by liquid financial instruments, competitive returns, tax certainty, reasonable hedging costs, and consistent regulations. Exporters’ decisions regarding the placement of foreign-exchange earnings are strongly influenced by economic incentives and confidence in government policy.
Policy communication must also be improved. As an open economy, Indonesia operates under a managed floating exchange-rate regime. Therefore, the objective is not to promise a specific exchange-rate level but to ensure a consistent response to excessive volatility, inflationary pressures, and disruptions in the foreign-exchange market. The government must also avoid statements that could create doubts about the independence of the central bank.
The private sector also has a responsibility to manage risk more effectively. Companies that earn revenue in rupiah while carrying obligations in US dollars need to treat hedging as a core business discipline. Importers should manage contracts and procurement schedules carefully, while exporters must remain aware of their dependence on imported raw materials, machinery, energy, technology, and dollar-based financing.
Although some argue that a weaker rupiah benefits exports, such benefits materialize only when industries have low import dependency, efficient logistics, competitive products, and sufficient production capacity. Otherwise, currency depreciation increases production costs more quickly than it boosts exports. Competitiveness cannot be built solely on a weaker exchange rate.
Ultimately, the rupiah does not need to be strong every day, and the stock market does not need to remain in positive territory at all times. However, when currency depreciation and stock-market declines reflect a crisis of confidence, policy responses cannot be merely cosmetic. Bank Indonesia must maintain stability without sacrificing credibility, the government must preserve fiscal discipline without undermining growth, and businesses must manage risks more effectively. History shows that currencies do not weaken solely because of market pressures but also because confidence loses its foundation.
Sources: Jernih.co – Rupiah Lunglai, Saham Terbakar, dan Kepercayaan Terus Memudar
