Bank Indonesia Governor Reports Directly to Prabowo, Revealing Two Reasons for Rupiah's Weakness

Jakarta – Bank Indonesia Governor Perry Warjiyo reported to President Prabowo Subianto regarding the weakening of the rupiah amid the current economic conditions. He revealed that there are two reasons for the sharp decline in the rupiah’s exchange rate.

“It was discussed earlier and we received guidance on the exchange rate, that the first point is that the current exchange rate is undervalued. Undervalued, and going forward, we are confident it will stabilise and strengthen,” said Perry during a press conference at the Presidential Palace Complex, Jakarta, on Tuesday, 5 May 2026.

He explained that economic growth of 5.61 percent in the first quarter of 2026, low inflation, strong foreign exchange reserves, and high credit growth should serve as a basis to indicate that the rupiah will stabilise and strengthen.

However, he acknowledged that in the short term, there is pressure on the exchange rate, with it currently breaching the level of Rp17,400 per US dollar.

“The reasons are two: global factors, and then seasonal factors,” said Perry.

He explained that the global factors in question include high oil prices, rising US interest rates, high yields on 10-year US Treasury bonds up to 4.47 percent, and the strengthening of the US dollar.

“And the Coordinating Minister (for the Economy) mentioned earlier the occurrence of capital flight from emerging markets, including Indonesia,” said Perry.

“April, May, June indeed see high demand for dollars, for dividend repatriation payments, debt payments, and also for Hajj pilgrims. But the rupiah is undervalued and will stabilise and tend to strengthen going forward. That’s number one,” he added.

It is known that the rupiah exchange rate against the US dollar on Tuesday morning was recorded weakening by 11 points or 0.07 percent to Rp17,405 per US dollar from the previous position of Rp17,394 per US dollar.

In response to this, Coordinating Minister for Economic Affairs Airlangga Hartarto explained several government steps to maintain the stability of the rupiah exchange rate amid pressures from global dynamics. These include strengthening currency swap cooperation between countries as well as diversifying national financing instruments.

“We have prepared with Bank Indonesia regarding currency swaps with China, Japan, Korea, and other countries,” said Airlangga at the Coordinating Ministry for Economic Affairs, Jakarta, on Tuesday, 5 May 2026.