Rupiah at Its Weakest in History: How the Current Situation Differs from 1998!

The rupiah exchange rate has officially touched the psychological level of Rp17,000 against the US dollar on trading Wednesday (1 April 2026). According to Refinitiv data, the rupiah did breach that level at 09:31 WIB this morning, with the weakening even continuing to touch Rp17,026/US, makingittheall − timeweakestintradaylevelfortherupiah.However, bymidday, therupiahmanagedtorebound, strengtheningby0.09, or back out of its psychological level. Nevertheless, the question remains whether the rupiah’s condition, which briefly breached a level deemed crucial by many, should be a cause for concern that an undesirable situation might occur. To answer this, the current situation needs to be viewed more proportionately, including by comparing it to the rupiah’s worst period in the past. Be Vigilant, But Not Time to Panic Yet In reading exchange rate movements, the market does not only look at the final level, but also the speed and range of the weakening. This is important, because weakening that occurs slowly and measurably is generally far better than a sharp spike in a short time. In other words, a weakening exchange rate does indeed need to be watched. However, the level of concern will differ if the movement is still relatively orderly and not wild. Compared to 1998, the current situation does indeed need to be monitored, but its character is very different. During the 1998 crisis, Indonesia not only faced exchange rate weakening, but a multi-layered crisis encompassing the economy, banking, politics, and society. The initial pressure came from the 1997 Asian financial crisis that caused the rupiah to collapse, then the situation worsened when market confidence in the government and financial sector crumbled. That condition was exacerbated by major riots after the Trisakti student shooting in May 1998, waves of demonstrations, looting, and the fall of President Soeharto on 21 May 1998. Therefore, the rupiah’s weakening at that time was very sharp and full of panic. In the darkest phase, the rupiah closed at Rp15,200/US$ on 16 June 1998 and briefly touched Rp16,800/US$ intraday. However, the main difference is not solely in the exchange rate level, but in the way the rupiah weakened. Based on Refinitiv data, on 2 January 1998 the rupiah was still at Rp6,000/US.Thatmeans, injustaboutfiveandahalfmonths, therupiahplummeted153.3. That was very aggressive weakening in a short time, occurring amid extraordinary market panic. The rupiah fell not only due to external shocks, but also because the domestic foundations at that time shook simultaneously. Compare that to the current situation. The rupiah has indeed touched Rp17,000/US, evenbrieflyweakerthanthatintraday.However, theweakeningdidnotoccursuddenlylikein1998.From26March2026whentherupiahwasatRp16, 895/US to 1 April 2026 at Rp17,000/US, thedepreciationwasonlyabout0.62 level is indeed psychologically heavy and still signals that external and domestic pressures are significant. However, so far, the rupiah’s weakening more reflects gradual market pressure.