The Indonesian government is reportedly planning a bill (RUU) to implement the redenomination of the rupiah, which is expected to be completed by 2027, according to a media report by ANTARA.
The bill is included in the list of strategic programs of the Ministry of Finance for the period 2025 to 2029, as stated in the Regulation of the Minister of Finance No. 70 of 2025.
The bill on the Rupiah Rate Change (redenomination) is expected to be finalized in 2027.
The proposal involves the removal of three zeros from the rupiah denomination without affecting the purchasing power of the people, with the aim of increasing economic efficiency and facilitating financial transactions.
For example, 1,000 rupiah will be converted into 1 rupiah after the redenomination, but the value of goods and purchasing power will remain the same.
This measure aims to increase economic efficiency, strengthen competitiveness, and maintain the momentum of the country's economic growth.
In addition, this redenomination is also expected to stabilize the value of the rupiah, maintain the purchasing power of the people, and increase the credibility of the currency at the national and international levels.
Bank Indonesia Governor Perry Warjiyo stated in 2023 that the central bank is willing to support the policy, but its implementation must be carried out carefully by taking into account economic and political stability.
History of the Rupiah Currency Fall
The history of the rupiah currency (IDR) decline was most significant during the 1997-1998 Asian Financial Crisis, although there were several other factors that also influenced its value.
Before 1997, the rupiah was stable at around 2,000 to 2,500 IDR per USD, driven by rapid economic growth, foreign investment inflows and favorable commodity prices.
However, during the 1997-1998 crisis that began in Thailand, the rupiah declined sharply from 2,400 IDR per USD (July 1997) to more than 15,000 IDR per USD (March 1998).
The fall of the rupiah was caused by a current account deficit, high external debt, currency speculation, weak banking institutions, and political instability.
The social and economic impact at that time was enormous, including a sharp increase in inflation, rising prices of basic goods, and rising unemployment.
This situation was also one of the factors that led to the fall of President Suharto in May 1998.
After the crisis, the value of the rupiah gradually stabilized at a level of 14,000 to 16,000 IDR per USD around 1999 to 2000, supported by assistance from the International Monetary Fund (IMF) and the implementation of financial reforms.
However, the rupiah remained sensitive to global political and economic developments.
