JAKARTA: The weakening of the Indonesian rupiah has dominated headlines in the country, as it fell to a record low last week, trading at around 17,600 rupiah for US$1.
This has broken what analysts call the “psychological barrier” of 17,500 rupiah, and well past the 16,800 level that marked the worst period of the 1998 monetary crisis.
On May 18, Perry Warjiyo, governor of Bank Indonesia, the country’s central bank, was grilled in parliament over the depreciation of the rupiah, with one MP even calling for him to step down.
“Perhaps it is time for you to resign. There is nothing wrong with that – it is up to you,” Primus Yustisio of the National Mandate Party told the governor at a parliament hearing.
But even as ordinary Indonesians and MPs alike raise concerns about the rupiah, President Prabowo Subianto and his administration have downplayed the issue, claiming that Indonesia’s economic fundamentals remain strong.
“Some people keep saying that Indonesia will collapse, will fall into chaos, because the rupiah this, the dollar that,” Prabowo said at an event in Nganjuk, East Java, on May 16.
“But people in the villages don’t use dollars. Our food and energy supplies are secure. Many countries are panicking but Indonesia is still okay.”
Cheering up the people?
Prabowo’s words, while intending to reassure, have apparently had the opposite effect.
Indonesian social media was soon flooded by memes and parodies about the weakening rupiah, a sure sign that the issue has hit home.
One video, posted shortly after the president’s speech by content creator Nuzulia Rahma on her Instagram account @tutorialhidub, has reached over 11.6 million views and 907,000 likes as at the time of writing.
“Village people don’t use dollars guys, they still use horses to get around,” Aul, as Nuzulia is commonly known, sarcastically says in the video. “When they want to eat, they have to go hunting first.”
Another video, from Raka Dion Saputra, has received over 3.1 million views and 191,000 likes. In the video, Raka claims that news of the rupiah weakening is a hoax, showing how rolled-up rupiah bills are able to support a gallon of water.
“The rupiah is strong,” Raka says directly into the camera with a straight face and a raised fist.
Finance Minister Purbaya Yudhi Sadewa has walked back Prabowo’s remarks somewhat, claiming that the president was not being completely serious.
“That was just to cheer up the people there. The context is that it was in a village, so it’s all right to speak like that,” Purbaya told reporters at the Presidential Palace in Jakarta, where he had been summoned by Prabowo to a meeting with other economics officials on May 18.
“The fundamentals of our economy are good, our fiscal (health) is good,” he added.
After the meeting, Purbaya denied that they had spoken much about the rupiah and reiterated his optimism about the economy. “(The president) just asked how the economy is, and (I said) that it’s good, the budget is also good, our economic fundamentals are really good.”
Perry, the Bank Indonesia governor, struck a similar note at the parliamentary hearing, pointing to seasonal patterns in the currency's performance.
“If we look at it year by year, the rupiah is generally under pressure in April, May, and June,” he said. “But it will strengthen in July and August. If we look at the graph, it will. That’s why we’re still confident.”
But Bhima Yudhistira, executive director of think-tank Center of Economic and Law Studies (CELIOS), had a less optimistic take.
“The president’s speech seemed to be trying to reassure the lower-middle class. But at the same time the upper-middle class and above are already starting to prepare to move their money to more liquid assets or abroad. This means there’s an information asymmetry,” he told The Straits Times.
“I’m concerned that if there’s a sudden shock, the lower-middle class will be the first victims,” he added.
Bhima pointed out that many goods consumed by villagers have imported components that will eventually lead to price increases if the rupiah continues to weaken against the dollar. Tempeh and tofu, for example, are made from soya beans, which are largely imported from the United States.
“Even food that is grown locally will be impacted, because pesticides, fertiliser, plastic, all use imported components,” he said.
Some villagers have already felt the effects.
Ninik Sukarmi, 57, a housewife in Blitar, around 60km from Nganjuk, where Prabowo made his speech, said that while tofu and tempeh prices have remained the same, the portions from her local seller have gotten smaller since before the Eid holidays in March.
“I asked her, ‘Ibu, how come the portions are so small?’ She said it’s because the cost of the plastic and the ingredients has gone up,” Ninik told ST.
Influx of tourists to Batam
The weakening rupiah has at least one positive impact -- an increase in foreign tourists.
According to data from the Indonesian Tourism Ministry, foreign tourist arrivals in the first quarter of 2026 increased by 8.6 per cent over the same period last year.
The number of tourists from Singapore has increased even more, by 10.4 per cent, most of whom have gone to Batam, which is less than an hour from Singapore by ferry. Similar to the the US dollar, the rupiah reached an all-time low against the Singapore dollar in May, trading at around 13,700 rupiah to S$1.
Ben, 36, who declined to give his last name for privacy reasons, has been to Batam with his family twice in the past few months, once during Chinese New Year, and again in early April.
He said one of his reasons for picking Batam as a destination was budget considerations.
“One hundred Singapore dollars may not stretch far in places like Thailand, but for Batam, it was enough to cover lunch, dinner, random buys at the convenience stores, and entrance fees for playground as well as transport,” he told ST.
“It’s budget-friendly for lower-income Singaporeans.”
The effects of the rupiah weakening have also been felt by Batam tourism industry professionals.
Yossie Christie, marketing and branding manager at Oakwood Hotel & Apartments Grand Batam, said that guests at her hotel had tended to book longer stays and also spend more on food and beverages in the first quarter of 2026.
“Guests that usually stay for two nights, are staying for three or four now,” she told ST.
“We were a bit worried that the ferry surcharge might result in fewer visitors, but that hasn’t been the case so far,” she added, referring to a surcharge that operators of ferry services from Singapore to Batam had introduced in March in response to increased fuel prices.
Addressing root causes
Deni Friawan, an economics researcher for Jakarta-based think-tank Centre for Strategic and International Studies (CSIS), said that while the weakening rupiah could have some positive short-term effects for the country, Indonesia needs to reflect on why the Singapore dollar has strengthened so much against it.
“This means that the competitiveness of Singaporean products, or the business climate in Singapore is better than in Indonesia,” he said.
“Therefore it’s important for us to improve our economic fundamentals and the credibility of our fiscal and monetary policy.”
Bhima agreed, saying that the rupiah’s depreciation was largely due to growing distrust among investors, triggered by, among other things, Indonesia’s growing budget deficit from Prabowo’s flagship populist programmes of free meals for students and state-backed village cooperatives.
“The most important thing is to win back that trust first,” he said. - The Straits Times/ANN
