Jakarta. Bank Indonesia on Wednesday said the recent weakening of the rupiah was largely driven by global currency pressures, rather than domestic fundamentals.

Erwin Hutapea, head of BI’s Department of Monetary and Securities Asset Management, said the rupiah’s movement in early 2026 has been shaped by escalating global geopolitical tensions, concerns over central bank independence — particularly in the United States — and uncertainty surrounding the future policy direction of the Federal Reserve. These external factors have coincided with increased demand for foreign currency in Indonesia at the start of the year.

“These conditions pushed the rupiah lower, closing at Rp16,860 per dollar on Jan. 13, or a 1.04% depreciation year to date,” Erwin said in a statement.

He said Bank Indonesia has actively entered the market to ensure the rupiah moves in line with its fundamental value and within a healthy market mechanism. The central bank will continue to optimize pro-market monetary operation instruments to maintain adequate liquidity, he added.

“Our objective is to support sustainable economic growth while achieving inflation targets and maintaining rupiah stability,” Erwin said.

Measures taken by the central bank to stabilize the currency include interventions in the offshore non-deliverable forward (NDF) market across Asia, Europe, and the United States, as well as interventions in the domestic market, including purchases of government bonds in the secondary market.

Erwin noted that foreign capital inflows — particularly into Bank Indonesia Rupiah Securities (SRBI) and the equity market — had reached a net Rp 11.11 trillion ($658.7 million) by mid-January, helping to shield the rupiah from sharper volatility.

Investor sentiment toward Indonesia remains positive, he said, as reflected in the country’s five-year credit default swap (CDS) premium, which remains low at around 72 basis points.

“Indonesia’s external resilience also remains solid, as shown by foreign exchange reserves at the end of December 2025, which stood at $156.5 billion, equivalent to 6.4 months of imports,” Erwin said. “This level is adequate as a buffer against global financial market pressures.”

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