Economist: Rupiah Depreciation Puts Pressure on Import Costs for Fuel

REPUBLIKA.CO.ID, JAKARTA — Economist and business expert from Hasanuddin University Makassar, Professor Hamid Paddu, stated that the weakening Rupiah exchange rate has a significant impact on the price of imported raw materials, including non-subsidised fuel. Moreover, Indonesia has been a net oil importer since 2004.

In mid-May 2026, the Rupiah exchange rate against the US dollar continued to weaken and broke through the psychological level of Rp 17,500 per US dollar. On Thursday (14/5/2026), the Rupiah closed at Rp 17,529 per US dollar.

According to Hamid, domestic oil production is not yet able to meet national needs, which reach 1.6 million barrels per day. Meanwhile, domestic production is only around 650 thousand barrels per day, so more than 50 percent of the needs are still met through imports.

“Imports are of course purchased using foreign currency, in this case the US dollar. That is why the exchange rate has a significant impact on fuel prices,” said Hamid in a statement in Jakarta, Saturday (16/5/2026).

He explained that both the Rupiah exchange rate and current world oil prices have exceeded the 2026 State Budget (APBN) assumptions. The exchange rate in the APBN is set at Rp 16,500 per US dollar, while the current world oil price has reached 105 US dollars per barrel, or far above the APBN assumption of 70 US dollars per barrel.

“This means that for imports, the energy burden has been hit by two pressures. First, from world oil prices, and then from the exchange rate,” he said.

Therefore, Hamid believes it is reasonable for business entities, including Pertamina, to eventually raise non-subsidised fuel prices. Moreover, the weakening of the Rupiah is expected to continue until the end of the year.