BI Governor Reports to Prabowo: Rupiah Undervalued but Confident It Will Strengthen Again

JAKARTA - Bank Indonesia Governor Perry Warjiyo, who met with President Prabowo Subianto, acknowledged that the rupiah is currently in an undervalued condition, though he promised that the rupiah will strengthen again. “It was discussed earlier and we received directions from the President regarding the exchange rate, related to two important matters concerning the exchange rate. First, the current exchange rate is undervalued. And going forward, we are confident it will stabilise and strengthen,” Perry stated during a press conference at the Palace in Jakarta on Tuesday evening (5/5/2026). Perry explained that Indonesia’s economic fundamentals are very strong. Furthermore, Indonesia’s economic growth is also very high, reaching 5.61 percent. “Low inflation, high credit growth, and strong foreign exchange reserves. These are the fundamentals that indicate the rupiah should stabilise and tend to strengthen,” he emphasised. He mentioned two factors: global and seasonal factors. For the global factor, Perry noted that the rupiah’s exchange rate weakened due to high oil prices, high US interest rates, and a strengthening dollar. “And the Coordinating Minister said there is capital flight from emerging markets, including Indonesia,” Perry said. According to the United Nations Economic and Social Commission for Western Asia (ESCWA), an undervalued currency is one with an exchange rate lower than it should be. A currency can be considered undervalued, for example, when its purchasing power, supply, and demand are all strong, but its price is still relatively low. In relation to the rupiah, this means the rupiah’s value is considered too weak compared to its proper value against foreign currencies, such as the US dollar.