Rupiah Nears 18,000: How Resilient is Indonesian Banking?
The weakening of the rupiah exchange rate often raises concerns among the public and business players. However, the impact of currency movements on the banking sector is not always direct, as the industry possesses several instruments to maintain resilience in the face of market turmoil.
The rupiah is once again approaching the level of Rp18,000 per US dollar. Based on Bloomberg data, the rupiah closed 9 points, or 0.05 percent, weaker at Rp17,943 per US dollar in trading on Thursday (25/6/2026).
The Financial Services Authority (OJK) stated that it continues to monitor the impact of global geopolitical and geo-economic uncertainty affecting financial markets and the exchange rates of developing countries, including Indonesia. Supervision is carried out routinely, including through stress tests to measure the banking sector’s resilience to various risk scenarios.
Dian Ediana Rae, Chief Executive of Banking Supervision at OJK, said that the rupiah’s depreciation has not yet had a significant direct impact on the stability of the financial services system. “Currently, the rupiah weakening has not had a direct and significant impact on the stability of the financial services system. In the banking sector, this condition is supported, among other things, by a low Net Open Position (PDN), which is far below the stipulated threshold,” he stated.
The Net Open Position is an indicator showing the extent of a bank’s exposure to exchange rate fluctuation risks. As of April 2026, the banking PDN was recorded at 1.63 percent, far below the regulatory maximum limit of 20 percent.
Beyond exchange rate risk, credit quality is also a concern when the rupiah weakens. The depreciation could potentially increase the burden on companies with debt or import needs in US dollars. If this condition persists, debtor repayment capacity could be pressured, raising the risk of non-performing loans.
Nevertheless, OJK noted that the Non-Performing Loan (NPL) ratio remains manageable at 2.17 percent. Meanwhile, the allowance for impairment losses (CKPN) to NPL ratio was recorded at 165.35 percent, which is considered adequate to anticipate a potential increase in credit risk.
From a liquidity perspective, the banking industry also remains relatively strong. Ratios for Liquid Assets to Third-Party Funds (AL/DPK), Liquid Assets to Non-Core Deposits (AL/NCD), Loan to Deposit Ratio (LDR), and Liquidity Coverage Ratio (LCR) are all still above the applicable minimum requirements.
According to Dian, OJK regularly conducts stress tests incorporating rupiah depreciation scenarios to measure the banking industry’s resilience. The test results show that the banking sector is still capable of withstanding pressures originating from exchange rate movements.
The impact of the rupiah’s depreciation differs between commercial banks and People’s Economy Banks (BPR). Because BPRs focus on raising funds and extending credit in rupiah, they have no direct exposure to foreign exchange transactions. However, BPRs can still be indirectly affected. This risk arises if MSME debtors experience increased production costs due to expensive imported raw materials or face declining public purchasing power due to inflationary pressures.
Therefore, OJK has asked banks and BPRs to enhance monitoring of debtors sensitive to exchange rate fluctuations and strengthen early warning systems to detect potential declines in credit quality more quickly. Amid global uncertainty, OJK assesses that banking capital remains the primary buffer in maintaining financial sector stability. As of April 2026, the banking industry’s Capital Adequacy Ratio (CAR) was recorded at 23.97 percent, indicating that the industry’s capacity to absorb risk remains at a strong level.