Indonesia’s central bank intervened in the currency markets on Thursday after the rupiah fell to a record low against the dollar, in the latest sign of the pressure building on Southeast Asia’s largest economy.
The rupiah touched 18,243 per US dollar, according to Reuters, breaking its previous record low of 18,190 set in early June. Other trading updates put the dollar as high as 18,272 rupiah during Asian hours. The currency has now lost more than 8% against the dollar since the start of the year, making it Asia’s weakest currency over that period.
Bank Indonesia said it was operating in domestic and overseas markets to ensure the exchange rate reflected the currency’s fundamentals. Erwin Gunawan Hutapea, head of the bank’s monetary and securities asset management department, said its measures included spot-market transactions, offshore and domestic non-deliverable forwards, and purchases of government bonds in the secondary market. The bank did not disclose the size of its intervention.
Indonesia held $146.8 billion in foreign exchange reserves at the end of October, giving the central bank firepower to manage the pressure. But it faces several demands at once: a stronger dollar, possible withdrawals by foreign investors and rising demand for foreign currency before the end of the year.
Three forces converged to push the rupiah to its low. First, hotter-than-expected US inflation data has strengthened expectations that the Federal Reserve will raise interest rates again in December, lifting the dollar and pulling money towards US assets. The dollar index reached 102.96, its highest since March 2025. Federal Reserve Governor Christopher Waller has said he would support a quarter-point rise, or a half-point move if inflation worsens.
Second, index provider MSCI warned in October that it may reclassify Indonesia from emerging-market to standalone status because of persistent concerns about investability, including opaque shareholding structures and weak enforcement. Goldman Sachs has estimated that such a move could trigger about $5.6 billion in passive investment outflows. MSCI’s November review added to the strain, removing two Indonesian stocks from its global standard indexes with effect from 1 December. MSCI will announce its reclassification decision by 30 June 2027.
Third, political uncertainty has intensified after Vice President Gibran Rakabuming Raka resigned this week, raising concerns about a split in the ruling coalition. A government minister said he expected the market pressure from domestic political developments to be short-lived, but investors were already weighing uncertainty over economic policy and the government’s major spending commitments.
Bank Indonesia described the rupiah’s recent movements as broadly in line with regional currencies. Eight of ten Asian currencies tracked during the morning session weakened against the dollar, with the Philippine peso down 0.54% and the Malaysian ringgit 0.20% lower. But Indonesia faces its own additional pressures from the MSCI review and the political turmoil in Jakarta.
The Jakarta Composite Index rose 0.8% during Thursday’s session even as the currency weakened, while the yield on Indonesia’s 10-year government bond stood at around 7.6%. Earlier in the month that yield had reached its highest level in six years.
For Indonesian businesses, a weaker rupiah raises the cost of anything priced in dollars. At 18,231 rupiah per dollar, a $1,000 payment costs 18.231 million rupiah, against 18.14 million at the previous closing rate. Importers and companies with dollar debts face the same arithmetic, while high oil prices are adding to the government’s subsidy costs.
Bank Indonesia’s immediate task is to keep currency and bond trading orderly while the pressures play out. The December index changes give investors a firm date for portfolio adjustments, and the Federal Reserve’s December meeting will help determine how strong the competing pull of dollar assets remains.
Sources: Reuters, “Indonesia central bank conducts currency interventions as rupiah hits record low” (https://www.tradingview.com/news/reuters.com,2026:newsml_LUN451016:0-indonesia-central-bank-conducts-currency-interventions-as-rupiah-hits-record-low/); Asia Daily, “Bank Indonesia Intervenes as Rupiah Hits Record Low” (https://asiadaily.org/news/18484/); FXStreet, “Indonesian Rupiah hits record lows on MSCI index concerns, political uncertainty” (https://www.fxstreet.com/news/indonesian-rupiah-hits-record-lows-on-msci-index-concerns-political-uncertainty-202611120437).
