What Industries Should Do Amid Rupiah Weakening
The Director of the Institute for Development of Economics and Finance (Indef), Esther Sri Astuti, has revealed several risk mitigation recommendations for industries affected by the weakening or depreciation of the rupiah exchange rate against the US dollar. The rupiah exchange rate fell again today, weakening by 33 points or 0.19 per cent to Rp 17,630 compared to the previous close of Rp 17,597 per US dollar. At the time of writing, the rupiah rate stood at Rp 17,659 per US dollar.
Esther stated that the first recommendation for industries to mitigate this risk is for companies to strengthen the use of hedging instruments to protect cash flows from foreign exchange fluctuations. Hedging is necessary because the depreciation of the rupiah against the US dollar can significantly pressure the manufacturing industry, particularly those heavily reliant on imported raw materials.
“This condition has a direct impact on the labour market through swelling production costs, rising imported inflation, the threat of layoffs, and a decrease in labour absorption due to hindered business expansion,” Esther said on Monday, 18 May 2026, as quoted from Antara.
Furthermore, she recommended that companies or industries begin seeking and partnering with local suppliers as an alternative to imported raw materials, although this effort is acknowledged to have its own challenges. Esther also suggested that companies implement efficiency measures and control operational costs. “Business actors should perform cost-cutting, such as rationalising capital expenditure (capex) and optimising working capital without sacrificing quality.”
Additionally, she advised the industrial and business sectors to attempt transactions using Local Currency Settlement (LCS) for international trade payments. “The more companies attempt to conduct international trade payments using the Local Currency Settlement or LCS mechanism, the more we can reduce the dominance and dependency on the US dollar,” said Esther.