Rupiah Plunges Further to 17,500 Level, Bank Indonesia's Response

Bank Indonesia (BI) has responded to the rupiah’s depreciation, which breached the Rp17,500 per US dollar level on Tuesday (12/5/2026). The central bank assured that it is continuously implementing various intervention efforts and anticipates that the rupiah weakening trend will soon subside. “The rupiah pressure today has increased due to the ongoing situation in the Middle East with rising intensity, driving up oil prices and global uncertainty,” said BI Senior Deputy Governor Destry Damayanti in her statement on Tuesday (12/5/2026). Domestically, Destry explained that there is indeed a high demand for US dollars. However, this demand is claimed to be seasonal. “Domestically, the increased seasonal need for US dollars, such as for external debt payments, dividend payments, and Hajj pilgrimage needs, is driving up US dollar demand in the domestic market,” she clarified. She stated that BI will continue to commit to being present in the market through interventions, both in the spot market, Domestic Non-Deliverable Forward (DNDF), and Non-Deliverable Forward (NDF). “And also optimising the use of all monetary operation instruments so that it is hoped to reduce pressure on the rupiah,” she said. Destry conveyed that BI sees foreign investor confidence in portfolio assets continuing to improve. This is reflected in foreign capital inflows, particularly into the Government Securities (SBN) and Bank Indonesia Rupiah Securities (SRBI) markets during April, amounting to Rp61.6 trillion. Additionally, foreign exchange liquidity in the domestic market is sufficiently high. This is evident from the year-to-date growth in third-party funds (DPK) in foreign currency at the end of March, recorded at 10.9 per cent. “BI estimates that this seasonal pressure will subside so that the rupiah exchange rate can return to its fundamental level,” she emphasised. The rupiah has breached the Rp17,500 per US dollar level, the highest in history. Citing Bloomberg, the rupiah weakened by 115 points or 0.60 per cent to Rp17,529 per US dollar at the close of trading on Tuesday (12/5/2026). Previously, it was known that the rupiah has been experiencing a fairly deep weakening trend amid high geopolitical and geo-economic uncertainty. Bank Indonesia Governor Perry Warjiyo, along with members of the Financial System Stability Committee (KSSK), met with Indonesian President Prabowo Subianto at the State Palace on Tuesday (5/5/2026) evening to discuss economic data, including the rupiah exchange rate depreciation. Perry revealed that Prabowo gave him instructions to take various steps to stabilise the rupiah exchange rate. There are at least seven things instructed to BI. First, BI will continue to conduct interventions, both in the domestic market through the spot market and DNDF, as well as in the offshore market through NDF. Interventions, among others, will be carried out in Hong Kong, Singapore, London, and New York. Foreign exchange reserves are claimed to be more than sufficient for stabilising the rupiah exchange rate. Second, using SRBI instruments to attract foreign funds (capital inflow) as an effort to counter capital outflows from SBN, bonds, and stocks. “Currently, SBN is experiencing outflows (capital outflow), and although stocks have seen inflows in recent weeks, year-to-date they are still outflows. Therefore, we agreed that for now, SRBI needs inflows to cover the outflows from SBN and stocks. This is to strengthen the rupiah exchange rate,” explained Perry in Jakarta on Tuesday (5/5/2026). Third, BI will continue to purchase SBN from the secondary market. This is a step that BI has been taking since the beginning of the year as a result of coordination between fiscal and monetary authorities. According to Perry, year-to-date up to now, BI has purchased SBN from the secondary market amounting to Rp123.1 trillion. “Fourth, we, along with the Minister of Finance, are maintaining liquidity in banking and the market more than sufficiently, indicated by the double-digit growth in primary money,” he said. Fifth, imposing restrictions on dollar purchases in the domestic market without underlying, reduced from 100,000 US dollars per person per month to 50,000 US dollars per person per month. This policy has been implemented by BI since April 2026. Perry mentioned that the nominal amount is planned to be reduced further. “We are preparing to lower it again to 25,000 US dollars per person per month so that dollar purchases above 25,000 US dollars must use underlying,” he stated. In line with that, BI is strengthening local currency transactions (LCT) between the Chinese yuan and the Indonesian rupiah. This cooperation is an alternative effort to reduce the need for US dollars. “Our local currency with the Chinese yuan is very high, and now a domestic market is starting to form, thus reducing or diversifying from the US dollar, so the rupiah can strengthen,” he said. Sixth, in line with intervention efforts in the offshore market through NDF and to better control exchange rate developments offshore or abroad, BI is allowing domestic banks to participate in selling NDF in the offshore market. “We are allowing domestic banks to sell NDF abroad so that the supply is greater. This will strengthen the stabilisation of the rupiah exchange rate,” said Perry. Seventh, BI will increase supervision of banking and/or corporations with high dollar purchasing activities. Perry stated that BI is sending supervisors and coordinating with the Financial Services Authority (OJK) to ensure financial system stability is maintained.