Indonesian Rupiah Falls to Its Weakest Level in History Against the US Dollar

International Desk: PNN

Indonesia’s currency, the rupiah, has fallen to its lowest level ever against the US dollar amid global energy shortages and ongoing geopolitical instability.

At one point on Thursday, the exchange rate reached 18,028 rupiah per US dollar, marking the weakest level recorded so far, according to market analysts.

Breaching the 18,000 level is considered a major psychological threshold in currency markets. The fall below this level has triggered renewed concern among investors, although Indonesia’s central bank has taken several measures to stabilize the market.

Analysts say rising global oil prices and pressure on supply chains have placed many Southeast Asian economies under strain. Countries heavily dependent on energy imports, such as Indonesia and the Philippines, are among the most affected.

Economist Joshua Pardede said higher international oil prices and declining trade surpluses have increased demand for the US dollar, putting additional pressure on the rupiah. He noted that reduced foreign exchange inflows from trade, combined with rising demand for dollars for energy imports, debt repayment, and profit repatriation, have intensified the imbalance.

The government has pledged to keep subsidized fuel prices unchanged, but authorities are struggling to manage dollar shortages in the market. At the same time, global uncertainty and new US import tariff policies are adding further pressure to regional economies.

Indonesia’s central bank raised its policy interest rate to 5.25 percent last month, marking the first increase in two years. It has also introduced measures to manage foreign exchange flows and stabilize dollar supply in the market.

However, central bank officials say that interest rate hikes alone are not sufficient under current conditions. Structural pressures in the market may continue to weigh on the currency in the long term.

Economists warn that rising import costs, foreign debt repayments, and capital outflows are collectively weakening the rupiah, creating new challenges for overall economic stability.