Rupiah Briefly Touches Rp 17,000, Economists Warn of Risks of Rising Fuel and Food Prices

JAKARTA — The rupiah briefly touched Rp 17,000 per US dollar during trading on Monday (10 March 2026), though it closed at Rp 16,949 per dollar. The move signals mounting pressure on Indonesia’s currency.

Mohammad Faisal, Executive Director of the Center of Reform on Economics (CORE) Indonesia, noted that the rupiah has been weakening since last year, influenced by both domestic and global factors. Several international institutions have raised concerns about Indonesia’s economic stability, including Moody’s Ratings, Morgan Stanley Capital International (MSCI), and Fitch Ratings, which have highlighted fiscal management and central bank independence issues.

“This will increase the tendency for capital outflows from developing countries towards safer destinations, including safe havens. So the rupiah, which was nearly at Rp 17,000, has now breached that level,” Faisal told Kompas.com on Monday (9 March 2026).

The currency depreciation risks triggering sharp increases in import prices and industrial raw materials. “Imported goods will experience extraordinary price increases. Both consumers and the industrial sector will be affected, as obtaining raw materials becomes significantly more expensive than before,” he explained.

Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies, attributed the rupiah’s weakness to both external and internal factors. The Iran-US-Israel conflict, which has led to the closure of the Strait of Hormuz, has driven up global oil prices. This prompts international investors to shift funds towards safer assets such as US dollars, strengthening the dollar and weakening developing country currencies including the rupiah.

Rising oil prices also threaten to increase energy subsidy burdens and widen Indonesia’s state budget deficit. “The state budget deficit has expanded fourfold compared to February 2025 levels. Tax revenues are still projected to weaken, coupled with rising government debt maturity obligations,” Bhima stated.

These conditions maintain strong investor attraction to the US dollar. “Under these circumstances, Bank Indonesia remains focused on stabilising the rupiah, leaving little room for policy loosening. Consequently, the Rp 17,000 per dollar level has become a critical threshold closely monitored by the market,” analysts noted.