Does a Weaker Rupiah Boost Exports and Indonesia's Economy? Economist Explains

Makassar, KOMPAS.com - Some time ago when the rupiah was weakening, social media influencers spread narratives claiming that the currency’s depreciation benefits Indonesia’s economy by boosting exports. Is this true?

Josua Pardede, Chief Economist at Bank Permata, said this narrative is misleading. The benefits are only felt in certain sectors, particularly commodity exporters.

Meanwhile, most of Indonesia’s manufacturing sector still relies on imported raw materials. As a result, rupiah depreciation could potentially suppress the national manufacturing industry.

“There have been many uneducative statements regarding this depreciation. It’s claimed that a weaker rupiah supports our economy through export spending. This is very wrong, totally wrong,” Josua stated during a media briefing in Makassar on Friday, 21 June 2026. “In essence, it’s misleading to say Indonesia benefits from rupiah depreciation,” he added.

“However, this does not apply to manufacturing industries that must import raw materials from abroad, paid for in US dollars.”

“It’s good when talking about commodity exporters, they will definitely benefit. But for manufacturing industries that need to import raw materials first, it will definitely be a burden,” he said.

“For businesses, they plan ahead for imports in three or six months. If the rupiah is stable, they will set their rupiah or dollar rates accordingly. They need planning and will communicate with their suppliers in the country of origin. So it will be communicated properly,” he explained.

“This is where Bank Indonesia (BI), as the central bank, plays a role in maintaining rupiah exchange rate stability to prevent excessive volatility.”

“According to Permata Bank data as of 22 May 2026, the rupiah has weakened over 5% against the US dollar year-to-date (YTD). Meanwhile, the US Dollar Index (DXY) has strengthened by around 0.9% (YTD).”

“Bank Indonesia’s role is not to direct the rupiah to a specific level, but to maintain stability,” he said.