Indonesia’s currency slipped to a new record low yesterday, as the country’s stock index fell and global oil prices jumped to two-week highs.
According to a report by Bloomberg, the rupiah dropped as much as 1.2 percent against the U.S. dollar, briefly touching a record low of 17,670 before recovering somewhat before the close of trading.
The slump came as trading resumed after a four-day holiday weekend. Jakarta’s main stock index also fell more than 4 percent, after global index provider MSCI removed six companies from its Indonesia Index and dropped another 13 companies from its small-cap index list. In January, MSCI threatened to downgrade Indonesia to frontier market status due to a number of transparency concerns, including the high concentration of ownership in certain companies and the limited “free float” of tradeable shares.
Despite the alarming devaluation of the rupiah, Bank Indonesia (BI) remains sanguine about the challenges facing the country’s economy. BI has “increased the dosage of our currency interventions” to support the value of the rupiah, BI Governor Perry Warjiyo told a parliamentary commission yesterday.
He added that despite the country’s foreign exchange reserves dropping by some $10 billion so far this year, the reserve level is “more than adequate” to maintain stability, and that BI expects the rupiah to rebound in July and continue strengthening throughout the second half of 2026.
