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View all search resultsGovt undecided on response to rupiah decline
The Indonesian currency hit a new historic low two weeks ago and is trading near 17,557 per US dollar as global uncertainty mounts.
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A teller is pictured through a glass pane holding rupiah banknotes at a money changer in Jakarta on April 9, 2025. (Reuters/Willy Kurniawan)
T
he rupiah has continued on its downward path since breaching its historic low two weeks ago amid global pressure, but the government is sending mixed signals about the need to activate a bond market response mechanism.
Readings from Investing.com showed the rupiah touching as low as 17,557 per United States dollar on Wednesday, sustaining a losing streak for a fourth day.
The currency has been on a depreciating trend that began when the US-Israeli war against Iran broke out on Feb. 28, dropping in late April below Rp 17,300, a low that had prevailed for almost three decades, since the Asian financial crisis in 1998.
When confronted about the depreciation, Finance Minister Purbaya Yudhi Sadewa has on multiple occasions pointed to the central bank, arguing that the “rupiah is the domain” of Bank Indonesia (BI), notwithstanding economists highlighting fiscal concerns as one of the exacerbating factors.
Last week, Purbaya floated the idea of activating an existing policy called the bond stabilization framework (BSF), which he said was one active measure the government could take to buttress the currency.
The BSF would involve carefully timed buybacks of government bonds to prevent yield spikes during volatile markets, but government officials have been conveying conflicting messages when asked to elaborate on the details of its implementation.
In the past, activating the BSF was based on a crisis management protocol, which, as Deputy Finance Minister Juda Agung explained last Thursday, distinguishes between four statuses: normal, alert, warning and crisis.
