Jakarta. Indonesia’s business community is urging the government to prioritize rupiah stability in 2027, saying predictable exchange rates are crucial for companies planning costs, investments and expansion.

The Association of Indonesian Employers (Apindo) said the government’s proposed rupiah assumption of Rp16,800 to Rp17,500 per US dollar for next year could serve as a benchmark for businesses, but warned that a target alone would not provide enough certainty after a year of sharp currency volatility.

“Given the volatility throughout 2026, stability, predictability and the ability to maintain market confidence are important factors so businesses have certainty when making medium- and long-term decisions,” Apindo Chairwoman Shinta W. Kamdani told Beritasatu.com on Thursday.

President Prabowo Subianto is scheduled to deliver the government’s statement on the 2027 state budget bill on Friday.

The rupiah assumption was agreed by the government and House of Representatives as part of the macroeconomic framework for the 2027 budget.

Shinta said the rupiah had faced pressure from a combination of external and domestic factors this year. These included a stronger US dollar, interest-rate policies in advanced economies, shifts in capital flows and geopolitical uncertainty.

Domestic factors have also contributed to currency pressure, including capital outflows, risk premiums, financial market conditions and investor confidence in the government’s economic policy direction.

For businesses, currency weakness can quickly translate into higher production costs because Indonesian industries remain heavily dependent on imported raw materials and capital goods.

About 71% of Indonesia’s imports consist of raw materials and intermediate goods, according to Shinta. A weaker rupiah therefore raises companies’ production costs, working-capital requirements and pressure on profit margins.

“In such conditions, rupiah depreciation directly increases the cost of goods sold, working-capital requirements and pressure on companies’ margins,” she said.

Companies do not always have much room to pass those higher costs on to consumers, Shinta said, particularly because some industries have limited access to domestic substitutes for imported materials.

As a result, she said the Rp16,800-Rp17,500 exchange-rate assumption would be more supportive for businesses if it could be achieved with controlled volatility.

Shinta said rupiah stabilization should not rely solely on monetary intervention. Credible coordination between fiscal and monetary policy would be needed to maintain investor confidence and support capital inflows.

The government should also maintain policy certainty and consistency, she said.

Over the medium term, strengthening domestic upstream industries and expanding import substitution would help reduce businesses’ exposure to exchange-rate fluctuations, she added.

“Fiscal and monetary policy coordination must remain credible, while the government also needs to maintain policy certainty and consistency to strengthen investor confidence and maintain capital flows,” Shinta said.

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