Rupiah Plunges to Lowest Level Since 1998, BI Assures No Monetary Crisis Ahead

March 27, 2025 | 10:37 am

TEMPO.CO, Jakarta — Bank Indonesia (BI) stated that the weakening rupiah exchange rate, which briefly touched Rp16,640 per US dollar, would not lead to a monetary crisis similar to 1998. The Head of the BI's Macroprudential Policy Department, Solikin M. Juhro, stated that Indonesia's current economic condition is much stronger than the crisis two decades ago.

"Fundamentally, we are still firm. Rupiah depreciation is currently influenced by global sentiments, and it is temporary. This situation is far different from the 1998 crisis, where we did not have sufficient mitigation mechanisms," said Solikin during Bank Indonesia's Media Briefing on the Liquidity Policy of Bank Indonesia at the Bank Indonesia Head Office, Central Jakarta, on Wednesday, March 26, 2025.

According to him, in 1998, the rupiah depreciated drastically from Rp2,800 to around Rp16,000 per US dollar in a short period due to the shallow domestic financial system and minimal foreign reserves of only around US$20 billion. At present, BI records Indonesia's foreign reserves reaching US$150 billion. He stated that the current foreign reserve figure provides a much stronger cushion against external pressures.

He also mentioned that the current rupiah depreciation is still within reasonable limits compared to other countries in the region. "We are relatively more moderate. Last year, Indonesia was one of the countries with the best-performing economies among its peers," he said.

As a mitigation, BI will maintain rupiah stability through market interventions and policy coordination with the government. "We ensure that volatility remains under control. BI is present in the market to ensure exchange rate stability in line with economic fundamentals," he stated.

Furthermore, he conveyed that BI strengthens regulations and risk mitigation by implementing the Law on Financial Sector Development and Strengthening. BI is developing an integrated crisis management protocol to face various challenges, including those from the digital and technology sectors.

Solikin stated that the current rupiah depreciation does not reflect a crisis. "It is more of a short-term sentiment. Fundamentally, our economy is still strong. Demand from the corporate and household sectors is still sustained, and Indonesia is still one of the countries with stable economic growth," he said.

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