Viewed as Vulnerable, Rupiah at Risk of Hitting Rp 20,000 in Short Order
JAKARTA, KOMPAS.com – The rupiah exchange rate is deemed to harbour significant vulnerability amid unrelenting global pressures. If external conditions continue to worsen, the rupiah could weaken to approach Rp 20,000 per US dollar in a relatively short time.
This view emerges against the narrative that Indonesia’s economy is relatively robust, supported by foreign reserves exceeding $150 billion or approximately Rp 2,400 trillion (at an exchange rate of Rp 16,000 per US dollar), as well as a debt structure dominated by long-term maturities.
“Indonesia is lulled, or more precisely, complacent with the narrative that its economy is strong, with large foreign reserves exceeding $150 billion, and a safe debt structure dominated by long-term tenors,” stated Managing Director of Political Economy and Policy Studies (PEPS) Anthony Budiawan in a press release on Monday (23/3/2026).
According to him, this portrayal does not fully reflect the actual economic fundamentals.
“The problem is that such statements do not entirely align with the facts. The economic fundamentals—both fiscal and monetary, as well as the exchange rate—are actually very weak, if not to say fragile,” he explained.
He also spotlighted the foreign reserves, long regarded as the primary buffer. In his view, the size of the reserves does not fully reflect the real economic strength.
“Indonesia’s foreign reserves are large in figures, but they are filled with a bubble of accumulated foreign debt, particularly by the government and Bank Indonesia. In other words, foreign debt is not used for productive activities but to bolster reserves and maintain rupiah exchange rate stability through interventions,” he emphasised.
Over the past decade, this pattern has repeated. In 2014-2015, reserves fell by around $9.44 billion or approximately Rp 151.04 trillion, while the rupiah weakened by about 20 per cent from Rp 12,185 to Rp 14,650 per US dollar.
The government responded at the time by issuing international bonds worth around $6.85 billion or approximately Rp 109.6 trillion to ease the pressure.
In 2018, pressure resurfaced with reserves depleted by $17.13 billion or approximately Rp 274.08 trillion. The rupiah then weakened by about 13.5 per cent to Rp 15,202 per US dollar, followed by increased issuance of global bonds and sukuk.
The sharpest pressure occurred at the start of the Covid-19 pandemic in 2020. Within one month, reserves dropped by $10.7 billion or approximately Rp 171.2 trillion, while the rupiah plunged by around 20 per cent to touch Rp 16,575 per US dollar.