Indonesia's rupiah has hit historic lows worse than the 1998 Asian financial crisis, driven by domestic policy concerns and global pressures. The depreciation is crushing small businesses, increasing living costs, and driving a surge in online debt.
Indonesia has again reduced the budget for President Prabowo Subianto's signature free school meals program to 229 trillion rupiah, with further cuts possible. The program, a key election pledge, faces efficiency drives, logistical issues, food poisoning incidents, and corruption allegations, prompting a review to improve quality over beneficiary numbers.
Indonesian assets have seen a sharp sell-off, with social media users creating a 'Sell Indonesia' narrative. Some users accuse Singapore of benefiting from this negative sentiment, leading to a counter-hashtag #SellSingapore.
The Indonesian rupiah recovered from a historic low, trading at 17,762 to the US dollar. The Indonesia Composite Index also rallied 5% after significant market turbulence. Analysts attribute the recovery to Bank Indonesia's aggressive monetary policy, including rate hikes.
The People's Bank of China, Hong Kong Monetary Authority, and Bank Indonesia have established a framework for direct bilateral transactions, facilitating the exchange of Indonesian rupiah and Chinese yuan to boost regional currency use and Hong Kong's role as an offshore renminbi hub.
Indonesia's central bank unexpectedly raised its policy rate by 25 basis points to 5.5% to stabilize the rupiah, which hit a record low of 18,190 against the USD, and to keep inflation within the 1.5%-3.5% target range for 2026-2027.
Indonesia's rupiah has fallen to a record low against the US dollar, surpassing 18,000, driven by surging energy costs from the US-Israel war and proposed US import duties. A narrowing trade surplus and high dollar demand exacerbate the situation, despite central bank interventions.
Indonesia's President Prabowo has pledged to improve railway safety after a crash in Bekasi, ordering immediate upgrades to level crossings including building overpasses and adding guard posts. The crash exposed critical weaknesses in Indonesia's rail network, including unguarded crossings, ageing infrastructure and fragmented regulatory responsibility.
Small chicken vendor Budi in Depok, Jakarta, faces nearly doubled plastic bag costs, jumping from 10,000 to 15,000-20,000 rupiah, threatening his already razor-thin margins. His predicament exemplifies the growing vulnerability of Indonesia's millions of small businesses to external economic shocks.
Southeast Asian governments are implementing remote work policies for civil servants to reduce energy consumption amid soaring costs triggered by the Iran war. Indonesia's Friday work-from-home policy, introduced April 1, is estimated to save 6.2 trillion rupiah (US$361.5 million) in fuel subsidies. The Philippines, Thailand, and Malaysia have similar measures. However, analysts warn that reduced petrol consumption from fewer commuters could be offset by higher household electricity use as air conditioners run all day.
