With Chinese Support, Rupiah's Fate Not as Poor as Other Currencies

Jakarta — Conflict in the Middle East erupting after the United States and Israel attacked Iran has intensified uncertainty in financial markets.

Bank Indonesia Deputy Governor Destry Damayanti stated that this condition has caused the currencies of various countries to weaken against the US dollar, which financial market actors consider a safe haven asset.

“Due to very high global uncertainty, all currencies of emerging market countries are being pressed down,” Destry said during a press conference on Bank Indonesia’s monetary policy committee meeting held online in Jakarta on Tuesday (17 March 2026).

Although all emerging market currencies are facing pressure, Destry emphasised that the rupiah’s depreciation against the US dollar is not worse than countries with equivalent economic capacity.

“If we look at yesterday’s closing position on a month-to-date basis throughout March, the rupiah has depreciated 1.29%. Some other countries: India 1.52%, Philippines 3.71%, and Thai baht 4.47%,” Destry said.

“So this means we in this region are indeed facing the same problem,” Destry stressed.

Destry explained that one positive effect supporting the rupiah’s resilience is Bank Indonesia’s consistent effort to promote Indonesian businesses to conduct cross-border trade transactions using local currency or local currency transaction (LCT).

Destry noted that the value of LCT transactions by February 2026 had already reached the equivalent of US$4.1 billion. Of this value, the majority came from transactions with China, which reached US$3.02 billion per month.

“This means the demand for currencies other than the dollar is increasingly growing in Indonesia, and this is what we continue to optimise by deepening the money market for the yuan or CNY-CNH, and we continuously do this so that those conducting transactions no longer need to buy dollars first and convert them to CNH,” he explained.

Destry stressed that with the LCT transaction concept, demand for dollars in the domestic market is declining, “because demand goes directly to the currency of the relevant partner.”