Indonesia’s rupiah weakened past the 18,000-per-US dollar level for the first time on Thursday, marking a record low as rising energy costs and policy uncertainty weighed on Southeast Asia’s largest economy.
The currency’s fall comes amid a broader market sell-off, with Indonesia’s stock market dropping nearly 4 percent and losing around a third of its value so far in 2026, according to market data.
Bank Indonesia has intervened in foreign exchange markets and raised interest rates to stabilise the rupiah, but has struggled to halt the decline as global oil prices surge and dollar demand strengthens.
Indonesia, a net oil importer, has been hit hard by higher crude prices, while its trade surplus has narrowed sharply, reducing foreign currency inflows. Analysts say rising import costs, external debt payments and dividend outflows have further increased pressure on the rupiah.
At the same time, parliament passed a bill expanding oversight of Bank Indonesia, adding economic growth and employment to its mandate and allowing lawmakers to assess the central bank’s performance. The reform also extends oversight to the Deposit Insurance Corporation and the Financial Services Authority, according to news agencies.
Finance Minister Purbaya Yudhi Sadewa said the changes aim to support growth and improve global competitiveness, arguing that policy must focus on both stability and job creation.
However, economists have warned that the move raises concerns over central bank independence, with analysts saying greater political involvement could increase investor risk perception and further pressure financial markets.
The rupiah’s weakness has also triggered public concern over rising living costs, with citizens warning of widening inequality as import-driven inflation affects households.
Economists say continued pressure on the currency will depend on global oil prices, fiscal policy direction, and investor confidence in Indonesia’s economic management.
