Rupiah Not Destroyed by War: Finance Minister Purbaya
Finance Minister Purbaya Yudhi Sadewa has rejected assessments that the rupiah’s exchange rate against the US dollar has collapsed due to conflict in the Middle East. Addressing President Prabowo Subianto, he emphasised that rupiah weakness during global conflict has been relatively modest.
At a full Cabinet Session at the State Palace in Jakarta on Friday, 13 March, Purbaya presented historical data demonstrating that whenever wars occur, the rupiah depreciates by an average of only 0.3 per cent. According to him, this figure reflects the rupiah’s resilience against global shocks.
“Looking at global dynamics, there is certainly turbulence affecting everything. Some say the rupiah has collapsed. But if we examine it properly, the rupiah depreciates by only 0.3 per cent with each war. So actually our resilience is good. The real market players who have genuine funds say this. But those who don’t have funds are the ones spreading negativity,” Purbaya stated.
Foreign Investor Confidence Remains
Purbaya asserted that claims of rupiah collapse do not reflect actual conditions. He stated that market participants who genuinely deploy capital continue to demonstrate confidence in Indonesia’s economic fundamentals.
He cited country risk indicators such as Indonesia’s five-year Credit Default Swap (CDS) spreads, which remain relatively stable. Additionally, the spread of State Securities (SBN) against US Treasury bonds has only changed marginally.
“Looking at the CDS, five-year IDR, it remains relatively stable. The chart on the upper right shows the spread of SBN against Treasury. In January 2025 it was 240 basis points. Now it is 243 basis points. The increase is only 3 basis points. This means foreigners still trust us. Only the domestic side doesn’t trust us. Actually, it’s only domestic observers who lack confidence,” Purbaya explained.
Capital Flows Continue Inward
The state treasurer also presented capital flow data demonstrating continued investor confidence in the domestic financial market. In March, for instance, whilst there was an outflow of approximately Rp 0.7 trillion from SBN, there was an inflow of around Rp 2.2 trillion into SRBI instruments and an inflow of approximately Rp 2.2 trillion into the stock market.
“So even after all the turbulence, in March capital continued to flow in. This means they genuinely believe our foundation is solid. This is what actual investors do, because they are putting their money in,” Purbaya concluded.