The combination of the depreciation of the rupiah and conflicts in\nthe Middle East has triggered inflation in imported materials and an\nincrease in prices that are directly felt by business actors.<\/p>\n
By Agustinus Yoga Primantoro<\/p>\n
12 Mei 2026 20:32 WIB \u00b7 English<\/p>\n
JAKARTA, KOMPAS \u2013 The depreciation of the rupiah poses a risk of\ntriggering a high-cost economy, particularly for businesses that still\nrely on imports, external financing, and foreign capital flows. On the\nother hand, conflicts in the Middle East are also putting pressure on\nproduction costs and market demand.<\/p>\n
Citing data from the Jakarta Interbank Spot Dollar Rate (Jisdor), the\nexchange rate of the rupiah in trading on Tuesday (12\/5\/2026) closed at\nRp 17,514 per US dollar, weakening by 99 points compared to the previous\nday\u2019s closing. This figure marks the deepest depreciation in\nhistory.<\/p>\n
The trend of the rupiah\u2019s weakening exchange rate, which continues to\nset new records, has been ongoing since the rupiah broke through the Rp\n17,000 level in early April 2026. The rupiah has now weakened by 5\npercent year-to-date.<\/p>\n
Data from Trading Economics indicates that the rupiah is the currency\nin Southeast Asia that has experienced the deepest depreciation in the\ncurrent calendar year. Other currencies that have also depreciated\ninclude the Vietnamese dong (0.15 percent), the Thai baht (2.89\npercent), and the Philippine peso (3.04 percent).<\/p>\n
Conversely, there are several currencies that have actually recorded\nappreciation during the current calendar year, namely the Singapore\ndollar (1.03 percent), the Brunei dollar (1.01 percent), and the\nMalaysian ringgit (3.06 percent).<\/p>\n
The Vice Chairman of the Indonesian Chamber of Commerce and Industry\n(Kadin), Sarman Simanjorang, stated that the continuously weakening\nexchange rate of the rupiah, which has recorded the deepest level of\ndepreciation in history, significantly pressures the psychology of\nbusiness actors and serves as an alarm that needs to be heeded.<\/p>\n
\u201cThe weakening of the rupiah will affect cash flow and operational or\nproduction costs because this increase will drive up the cost of\nimported raw materials and logistics,\u201d he said when contacted from\nJakarta.<\/p>\n
Furthermore, if this depreciation of the exchange rate continues, the\nresilience of business actors will become increasingly limited, raising\nconcerns about price adjustments reaching consumer levels. This\ncondition could affect the purchasing power of the public and\ninflation.<\/p>\n
If this exchange rate depreciation continues, it is feared that\nbusiness turnover will be further depressed and they will ultimately\nresort to workforce rationalization.<\/p>\n
According to Sarman, the micro, small, and medium enterprises (UMKM)\nsegment is at risk of becoming increasingly pressured due to rising\nprices of raw materials, logistics, and distribution. At the same time,\nthe decision to raise prices risks putting pressure on sales\nperformance.<\/p>\n
Various risks have been reflected in the Retail Sales Survey results\nreleased by Bank Indonesia (BI). Although the Real Sales Price Index\n(IPR) in March 2026 grew by 3.4 percent year-on-year, retail sales are\nexpected to decline by 1.91 percent year-on-year in April 2026.<\/p>\n
This decline is primarily observed in the Cultural and Recreational\nGoods, Food, Beverages, and Tobacco, as well as Motor Vehicle Fuel\ncategories. In fact, respondents, who are predominantly from the\nbusiness sector, estimate that retail sales in the next 3-6 months will\ncontinue to trend downward.<\/p>\n
Referring to the survey from BI, inflationary pressures in the next\n3-6 months (June and September 2026) are expected to increase. This\nincrease is primarily driven by expectations of general prices in line\nwith the rise in raw material costs.<\/p>\n
As a mitigation measure, Sarman continued, the business world is\ntaking innovative steps through operational or production cost savings,\nseeking locally sourced raw materials, and reducing product sizes\nwithout increasing prices.<\/p>\n
\u201cIf this depreciation of the exchange rate persists, it is feared\nthat the turnover of business actors will be increasingly pressured,\nultimately leading to workforce rationalization. This is certainly\nsomething we want to avoid. We fully support various government efforts\nto ensure that the strengthening of the rupiah exchange rate occurs\npromptly,\u201d he stated.<\/p>\n
Contacted separately, the Chairperson of the Trade Sector of the\nIndonesian Employers Association (Apindo), Anne Patricia Sutanto, stated\nthat the depreciation of the rupiah has a tangible impact on the\nbusiness world. This pressure is particularly felt by the manufacturing\nindustry and labor-intensive industries.<\/p>\n
Both industries are experiencing the greatest pressure due to their\nhigh dependence on imported raw materials, energy, and dollar-based\nproduction components. The manufacturing sector is one of the most\naffected by this pressure.<\/p>\n
\u201cFor the textile, plastics, chemical, electronics, and automotive\nindustries, the exchange rate increase has a direct impact on the cost\nof goods sold and operating margins,\u201d he said.<\/p>\n
He added that the depreciation of the rupiah exchange rate from\naround Rp 16,800 to approximately Rp 17,400 per US dollar has generally\nincreased production costs across various sectors, particularly in\nindustries that rely on imported raw materials.<\/p>\n
On the other hand, the business world is also facing pressure from\nsoaring global energy and raw material prices due to geopolitical\nconflicts in the Middle East. This combination has triggered imported\ninflation and cost-push pressure, which are directly felt by\nbusinesses.<\/p>\n
Anne added that the Indonesian business world is not standing still.\nMany companies are moving quickly to improve efficiency, strengthen\nlocal sourcing, implement foreign exchange hedging, increase\nproductivity, and diversify export markets to maintain\ncompetitiveness.<\/p>\n
Indonesia needs to ensure that every domestic policy is able to\nmaintain a conducive business climate and support the competitiveness\nof<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-depreciation-triggers-high-economic-cost-risks-1778684043", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }