OJK: Banking Exposure to Exchange Rate Risk Relatively Well Contained
The Financial Services Authority (OJK) has stated that the banking sector’s direct exposure to exchange rate risk is relatively guarded and controlled, as reflected by the Net Foreign Exchange Position (NFP) ratio, which remains consistently far below the maximum threshold of 20 per cent of a bank’s capital.
As of April 202long, the NFP ratio was recorded at 1.63 per cent, maintaining a long position where foreign currency assets exceed foreign currency liabilities.
“Nevertheless, OJK continues to remain alert to various risk transmission channels resulting from Rupiah exchange rate movements affecting financial institutions in Indonesia,” said the Chair of the OJK Board of Commissioners, Friderica Widyasari Dewi, during a press conference following the May 2026 RDKB meeting in Jakarta on Friday.
She noted that several risks requiring vigilance include the potential increase in foreign currency liability burdens for corporations, pressure on business sectors with high import exposure, and the impact of rising raw material and operational costs. According to her, these conditions could affect the quality of banking assets, particularly through the diminished repayment capacity of debtors if financial pressures persist.
To mitigate these risks, OJK is strengthening the monitoring of foreign exchange activities in the banking sector through intensive daily NFP monitoring, foreign currency liquidity adequacy, and stricter compliance with relevant foreign exchange regulations. OJK is also conducting supervisory dialogues with banks showing specific position accumulations to ensure that market and liquidity risk management is adequately implemented.
“We continue to strengthen coordination with Bank Indonesia, as the monetary authority, to ensure that foreign currency liquidity adequacy in the financial system remains maintained,” said Friderica.
On the same occasion, OJK Executive Head of Banking Supervision, Dian Ediana Rae, ensured that the authority is continuously conducting regular monitoring and evaluation regarding exchange rate movements and their impact on banking. With the NFP in a long position, Dian stated that the direct impact of Rupiah depreciation on banking stability remains relatively limited.
“However, prolonged Rupiah weakness could certainly impact debtors with vulnerabilities to foreign exchange movements, which in turn could pressure debtors’ ability to pay and increase credit risk,” he said.
Under these circumstances, OJK continues to instruct banks to ensure adequate formation of allowances for impairment losses (CKPN) and maintain strong capital resilience. To ensure that Indonesian banks have measured and controlled various risks, OJK is continuously monitoring risk developments and requesting banks to consistently implement comprehensive risk management.
“Amidst global conditions that remain full of uncertainty, OJK is increasing its focus on individual bank supervision. This is the most important task we are undertaking,” said Dian.
To measure the banking sector’s resilience against various potential macroeconomic shocks, OJK also routinely conducts stress tests. Based on the results of these stress tests, the banking sector is deemed capable of facing potential pressures arising from Rupiah depreciation. Furthermore, banks also routinely conduct independent stress tests, using both their own scenarios and those prepared by the authorities, to ensure their ability to mitigate risks, including those stemming from exchange rate fluctuations.