Does a Weakening Rupiah Boost Exports? Here's the Explanation

JAKARTA, KOMPAS.com - A weakening rupiah does not always have a negative impact.

For export sectors, a weaker rupiah can actually boost profits for exporters, especially those using domestic raw materials and selling products internationally in US dollars.

Senior economist at the Institute for Development of Economics and Finance (INDEF), Tauhid Ahmad, explained that the benefits of a weaker rupiah are mainly felt by export sectors whose raw materials are predominantly domestic.

“Export products that rely mainly on domestic raw materials will benefit when the rupiah weakens,” Tauhid told KOMPAS.com on Wednesday, 27 May 2026.

“Because production costs are in rupiah, while sales are priced in international markets,” he said.

He cited commodities such as coal and crude palm oil (CPO), where most of the production chain remains domestic.

“For example, coal or CPO exports. Most production costs are domestic. When international prices rise and the rupiah weakens, they can secure significant gains,” he added.

However, Tauhid stressed that the situation differs for export industries reliant on imported raw materials.

According to him, the benefits of a weaker rupiah are limited as higher import costs increase production expenses.

He cited the electronics, machinery, and metal-based industries which depend heavily on imported raw materials like iron and steel.

“For instance, electronics or machinery products, most components are imported. So when the rupiah weakens, production costs also rise,” he continued.

Beyond boosting margins for certain sectors, a weaker rupiah is also seen as strengthening Indonesia’s competitiveness in global markets.