Political Pressure Cannot Solve Rupiah Weakness

The weakening of the rupiah exchange rate must be responded to with appropriate and measured economic policies, not with political pressure that could potentially create uncertainty. Amidst calls for a ‘Reformasi Jilid 2’ from several student groups, an observer has reminded that political stability remains an important factor in maintaining market and investor confidence.

Political observer Ayip Tayana assessed that strengthening the rupiah cannot be achieved through political ultimatums directed at the government or Bank Indonesia. According to him, the exchange rate is more influenced by market players’ confidence, macroeconomic conditions, and the certainty of the government’s policy direction.

‘The rupiah will not strengthen with ultimatums from students. The rupiah will strengthen with market confidence, political stability, and disciplined fiscal policy. If the rupiah weakens and the answer is Reformasi Jilid 2, then that is not a solution,’ Ayip said on Friday (12/6/2026).

The Executive Director of the National Data Index explained that financial markets are very sensitive to political dynamics. Therefore, narratives that could potentially trigger instability may actually affect investors’ perception of the investment climate in Indonesia.

According to Ayip, investors generally place political stability as one of the main considerations in making investment decisions. When uncertainty increases, capital flows have the potential to be held back or even withdrawn from the domestic market.

‘Investors will look at political stability. If the narrative developing is the threat of Reformasi Jilid 2, then investors could hold back or even pull their funds abroad,’ he said.

Nevertheless, Ayip emphasised that criticism and aspirations from students remain important in democratic life. He assessed that the student movement would be more relevant if focused on pushing for improvements in economic policy and enhancing public welfare.

‘Student actions are relevant if their goal is to remind the government to improve the economy. But they become irrelevant if rupiah fluctuations are used as an entry point to build a narrative of impeachment or the overthrow of power,’ he stated.

He also assessed that Indonesia’s current condition is different from the situation leading up to the 1998 Reformasi. According to him, the government still possesses strong political legitimacy and the support of the majority of political parties in parliament.

Furthermore, Ayip said he has not yet seen a major consolidation from various elements of society or the political elite directed towards an effort to change power, as occurred at the end of the New Order era.

‘I have not yet seen a strong cross-national consolidation, from labourers, students, the public, to the political elite. Therefore, the possibility of a situation like 1998 occurring is still very small,’ he said.