Conditions Are Heavy: Rupiah Collapse Adds Further Problems, Here Is How Indonesia Can Survive
The Chairperson of the National Leadership Council of the Indonesian Employers Association, Shinta Kamdani, believes the business world will face increasing difficulties due to the weakening of the Rupiah against the US Dollar. Currently, the exchange rate has breached a new psychological level of Rp 18,000/US$.
According to Shinta, significant pressure is being felt by the textile and textile products, chemical and petrochemical, plastic, basic metal, electronics, and automotive industries, as well as various sectors that still rely on imported components in their production chains. “This condition is becoming even heavier because the business world is also still facing relatively high logistics, energy, and financing costs. In other words, business actors are currently facing significant, externally driven, multi-layered cost pressures,” she stated when contacted on Thursday (4/06/2026).
Shinta also noted a decline in business optimism. According to her records, the Manufacturing PMI has returned to the contraction zone since July 2025, and the downward trend in the Industrial Confidence Index (IKI) indicates that the real sector is facing a more challenging phase. “Furthermore, this Rupiah weakness is much deeper than the position in the first quarter of this year, when some manufacturing sub-sectors grew below the national economic average, and four manufacturing sub-sectors experienced contraction,” said Shinta.
She explained that the current challenges lie in the impacts on production costs, financing, and business certainty, especially since reliance on imported raw materials remains around 80%. “The weakening of the Rupiah directly increases the cost of goods sold, narrows business margins, and reduces the room for companies to expand,” she said.
Furthermore, Shinta noted that the business world has taken various mitigation steps to address the impact of the exchange rate weakness. “Many companies are choosing to implement operational efficiencies, hiring freezes, controlling non-essential costs, delaying new expansions and investments, diversifying markets, strengthening the use of local raw materials, and employing hedging strategies to manage exchange rate risks,” she said. She added that entrepreneurs are currently focused on maintaining business continuity while preserving jobs amidst rising cost pressures.
As information, the Rupiah’s weakness continues, breaching the new psychological level of Rp 18,000 per US dollar. In today’s trading, Thursday (4/06/2026), the Rupiah closed weaker by 0.45% at the level of Rp 18,020/US, accordingtoRefinitiv.PressureontheRupiahwasevidentfromthestartoftrading; theRupiahopenedweakerby0.11. However, only minutes after the opening, the ‘Garuda’ currency plummeted past Rp 18,000/US$ and remained above that level until the close of trading.
Regarding the hopes of entrepreneurs, Shinta stated that business owners hope the government will continue to maintain Indonesia’s macroeconomic credibility and market confidence through strong policy coordination between fiscal and monetary authorities and the real sector. “Exchange rate stability is very important, but at the same time, it needs to be balanced with concrete steps to reduce various components of the high-cost economy that have long burdened the business world, ranging from logistics, energy, and licensing costs to the relatively high cost of compliance,” she said.
On the other hand, entrepreneurs acknowledge the steps taken by the government and Bank Indonesia to maintain macroeconomic stability. For instance, Bank Indonesia’s decision to raise the BI Rate by 50 basis points to 5.25% is understood as a pre-emptive stabilisation policy to maintain Rupiah stability, control inflation risks, and maintain market confidence amidst increasing global financial market pressures and high geopolitical risks. Shinta believes Indonesia’s economic fundamentals still possess good resilience. However, she added that in the current situation, the effectiveness of stabilisation policies must be balanced with measures capable of maintaining the resilience of the real sector. “Macro stability and economic growth cannot be separated. Therefore, in addition to maintaining exchange rate stability, policies are needed that can reduce business cost pressures, strengthen the investment climate, ensure the smooth flow of trade and logistics, and increase the competitiveness of national industry so that the economic stabilisation process can proceed without sacrificing the momentum of growth and job creation,” she concluded.