The Indonesian rupiah continued to fall to its lowest level in history against the US dollar on Tuesday, despite the US dollar itself showing weakness in global markets.
This came as a surprise to many because the rupiah is usually not badly affected by a weakening US dollar.
The main reason for the fall was not solely due to external factors, but rather investor concerns about political interference in Bank Negara Indonesia (BNI).
The nomination of Thomas Djiwandono, nephew of Indonesian President Prabowo Subianto, as Deputy Governor of the central bank has sparked uncertainty about the financial institution's autonomy.
Since the beginning of 2026, the rupiah has fallen almost 2% against the US dollar, making it the weakest currency among emerging economies in Asia.
Throughout 2025, the rupiah has depreciated by 3.5%. On January 20, it reached a record high of 16,985 rupiah per dollar, surpassing the level during the 1998 Asian financial crisis of around 16,800 rupiah.
Although the currency recovered slightly to 16,936 rupiah yesterday, the pressure on the rupiah is still visible.
This situation is more worrying because this time domestic factors are clearly dominant over global sentiment.
The Prabowo administration recorded a 2025 fiscal deficit of 2.92% of Gross Domestic Product (GDP), exceeding the 2.53% target in the budget and the mid-year projection of 2.78%.
The estimate is the largest deficit in two decades, excluding the period of the COVID-19 pandemic.
This widening deficit raises serious questions about Indonesia's ability to maintain fiscal stability.
This currency crisis is not just a question of the exchange rate, but also involves the integrity and independence of the country's main financial institutions.
If BNI is not free from political interference, the market will continue to doubt the country's ability to manage the economy professionally.
