BI Reveals Causes Behind Rupiah Breaching Rp18,000 per US Dollar

The rupiah exchange rate underwent a deep correction, breaching the level of Rp18,000 per US dollar on Thursday (4/6/2026). Responding to this, Bank Indonesia (BI) stated the rupiah’s weakening is still influenced by global factors, particularly the impact of the conflict between the United States (US), Israel, and Iran. “The exchange rate depreciation is still influenced by Middle East geopolitical tensions which have escalated again and hindered peace prospects, thus keeping oil prices high and increasing global inflation risks and capital outflows from emerging market countries,” said BI Senior Deputy Governor Destry Damayanti in an official statement on Thursday (4/6/2026). Furthermore, Destry noted that domestic demand for the US dollar also remains high, among other things for dividend repatriation and foreign debt payments. “Bank Indonesia will continue to be present in the market and increase the intensity of intervention to ensure market mechanisms function well and rupiah exchange rate stability is maintained in line with its fundamentals. In addition, it will strengthen the interest rate structure of pro-market monetary instruments so that they remain attractive for capital inflows into domestic asset instruments,” she said. Continuous intervention will be carried out through Non-Deliverable Forward (NDF) transactions in the offshore market, spot transactions and Domestic Non-Deliverable Forward (DNDF) in the domestic market, as well as purchases of Government Securities (SBN) in the secondary market. Intensive coordination and communication with corporations and other market players are also continuously being conducted. “Moreover, Bank Indonesia also encourages the use of local currency in bilateral cooperation through the Local Currency Transaction (LCT) scheme as an effort to reduce dependence on the US dollar and mitigate exchange rate volatility risks,” she continued. This cooperation has been established with China, Japan, Malaysia, Thailand, South Korea, and the United Arab Emirates (UAE). According to Destry, the diversification of trade transactions through the LCT scheme continues to increase. As of April 2026, its value reached approximately 22.7 billion US dollars, compared to around 25.7 billion US dollars throughout the previous year. “In general, the rupiah’s depreciation is still in line with regional currencies. On a year-to-date (YTD) basis, the rupiah has weakened by 7.44 percent. Foreign exchange reserves are maintained at a level of 146.2 billion US dollars at the end of April 2026,” she stated.