OJK Reveals Impact of Rupiah Weakening on the Banking Sector

The Chief Executive of Banking Supervision at the Financial Services Authority (OJK), Dian Ediana Rae, has stated that the current weakening of the rupiah has not yet impacted the financial services sector, particularly banks. The rupiah is currently moving back towards the level of 18,000 per US dollar and closed at 17,922 in trading on Friday, 26 June 2026. Dian stated that exchange rate depreciation can trigger an increase in production costs and inflation. This is due to the rising cost of imported goods, which can subsequently affect people’s purchasing power. “For the time being, the rupiah weakening has not had a direct and significant impact on the stability of the financial services system,” he said via an official statement quoted on Saturday, 27 June 2026. He explained a number of indicators showing why national banks are still resilient in facing the currency slump. One of these is the support from a low Net Open Position (PDN), which is far below the established threshold. PDN is a ratio that measures a bank’s risk of loss due to foreign exchange rate fluctuations. “In April 2026, the PDN was at a level of 1.63 percent and in a long position, far below the threshold of 20 percent.” From a credit perspective, Dian stated that banking credit risk remains well maintained. The figure for non-performing loans (NPL) at national banks is currently still below 3 percent, at 2.17 percent. In addition, banking liquidity conditions remain quite well maintained and relatively stable, with the ratio of Liquid Assets to Third-Party Funds (AL/DPK) and Liquid Assets to Non-Core Deposits (AL/NCD) above the thresholds of 10 percent and 50 percent. On the liquidity side, the national banking Loan to Deposit Ratio (LDR) is considered still good at 86.88 percent, remaining in the 78-92 percent range. The Liquidity Coverage Ratio (LCR) stands at 192.37 percent, still far above the threshold and sufficient to meet short-term liquidity needs going forward. Nevertheless, according to Dian, a continued weakening of the rupiah exchange rate could potentially impact debtors with exposure vulnerable to foreign currency movements. This could ultimately pressure debtors’ repayment ability and increase banking credit risk. Under such conditions, he believes banks need to ensure the adequacy of Allowance for Impairment Losses (CKPN) and strong capital resilience. Up to April 2026, the OJK recorded the CKPN to NPL ratio at 165.35 percent, which is considered still adequate. The capital resilience of banks also remains solid with a Capital Adequacy Ratio (CAR) of 23.97 percent. The OJK continues to monitor developments and asks banks to always implement comprehensive risk management. The authority also periodically conducts stress tests incorporating a rupiah weakening scenario as one of the assumptions. “Based on the results of these stress tests, the banking sector is assessed to still be capable of facing potential pressures arising from exchange rate depreciation,” he said.