Indonesia's Currency Plummets to Historic Lows

Indonesia's currency, the rupiah, has plummeted to historic lows against the US dollar, causing widespread anxiety among Indonesians. Over the past six months, the exchange rate has fallen from around 15,000 rupiah per $US1 in September 2024 to more than 18,000 rupiah in June this year and remains stubbornly low.

The decline is worse than during the 1998 Asian financial crisis, which led to the downfall of Indonesia's former authoritarian president Suharto. According to economist Dipo Satria Ramli, domestic factors such as 'unpredictable policies', concern over transparency and accountability, and fiscal policy are primarily responsible for the rupiah's decline.

Many Indonesians rely on imported goods, including soybeans used in tempeh production, which has become increasingly expensive due to the depreciating currency. Ahmad Saikhu, a long-time tempeh maker, warns that if the situation continues, 'a lot of businesses could go bankrupt' and lead to widespread unemployment.

The crisis is also affecting street food sellers, who have had to raise their prices to deal with rising production costs. Tens of millions of Indonesians are taking out online loans, known locally as pinjol, to help cover basic costs, while the government scrambles to stabilize the currency.