Rupiah Weakens, Indonesians Flock to Save in US Dollars

Third-party funds in the form of foreign currency savings at Indonesian banks are growing rapidly, with the increase far more aggressive than that of rupiah-denominated savings. According to Bank Indonesia’s money supply report for May 2026, rupiah savings remained the largest nominally, recorded at Rp2,904.2 trillion. This figure is still substantial but slightly down from Rp2,914.6 trillion the previous month. The opposite trend is evident in foreign currency savings. In the same period, foreign currency savings were recorded at Rp260.9 trillion, a significant increase from Rp246.1 trillion in April 2026. This means that in just one month, foreign currency savings grew by approximately Rp14.8 trillion, while rupiah savings fell by around Rp10 trillion. Since the beginning of the year, the increase in foreign currency savings has been very consistent. In January 2026, foreign currency savings stood at Rp218.6 trillion, rising to Rp219 trillion in February, surging to Rp242.9 trillion in March, climbing again to Rp246.1 trillion in April, and reaching Rp260.9 trillion in May. On a year-to-date basis, foreign currency deposits in banks have increased by Rp51.8 trillion. A clearer picture emerges from the annual growth rate. In May 2026, rupiah savings grew by 7.3% year-on-year, up from 6.6% in April. However, foreign currency savings growth was much faster, soaring 29.9% year-on-year in May, the highest level in the available data series. This rapid growth is not a one-off event; since the start of 2026, growth has consistently been in double digits. The surge in foreign currency savings is closely linked to the rupiah’s recent pressure against the US dollar. Throughout 2025, the rupiah weakened by 3.6% against the dollar, underperforming regional peers like the Malaysian ringgit, Singapore dollar, and Thai baht, which all strengthened. In such conditions, individuals and businesses become more cautious, often viewing dollar savings as safer amid global financial volatility. Practical needs also play a role, as importers and those with foreign currency obligations or overseas expenses require dollar holdings. Consequently, foreign currency savings are growing much faster than rupiah savings, with interest in dollar deposits strengthening as the rupiah remains under pressure.