Jakarta. Indonesia is banking on currency swaps with China and other major trading partners as the rupiah continues to weaken against the dollar.

The Indonesian rupiah closed at Rp 17,424 per dollar on Tuesday, the lowest level ever seen in history. Chief Economic Minister Airlangga Hartarto said that the Indonesian central bank had come up with some strategies to reduce exposure to the greenback, and that is exchanging currencies of equivalent value with its foreign counterparts. 

“We are working with Bank Indonesia to prepare currency swap arrangements with China, Japan, and South Korea,” Airlangga told a press briefing in Jakarta, when asked about the government’s plan to mitigate the rupiah’s weakening.

Indonesia has signaled plans to roll out yuan-denominated bonds “to ease the dollar pressure”.

Airlangga left the conference room without spilling more details on the swap, only saying that the scheme is "different from local currency transactions,” which enables Indonesia and China to conduct export-import activities in their respective currencies, hence dropping the dollar. 

Bank Indonesia and the People’s Bank of China have repeatedly extended their bilateral currency swap agreement, with the most recent one just signed in 2025. The latest agreement, which is valid for five years, set a swap scale of up to 400 billion yuan or around Rp 878 trillion. This was equivalent to $55.79 billion at the time. 

In February, Bank Indonesia struck a swap deal with South Korea, capped at 10.7 trillion won or Rp 115 trillion, now extended until 2031. This was worth approximately $7.32 billion back then, media reports showed. 

In 2024, Jakarta renewed its swap arrangement with Tokyo for a size of up to $22.76 billion or its equivalent in yen.

It is unclear whether Indonesia will take advantage of the existing deals or seal a new one.

Senior economist Bhima Yudhistira views the plan as “valid” in times of emergency, citing that many of Jakarta’s exports are Beijing-bound. However, the current situation is a “reminder” of Indonesia’s reliance on the greenback as it shows businesses still trade in dollars with China, according to Bhima.

“I guess a currency swap is okay if it’s an emergency. But it’d be better if Bank Indonesia focuses on de-dollarization through local currency settlements first,” Bhima told the Jakarta Globe.

“Our central bank should also consider tapping into special drawing rights,” Bhima said, alluding to the supplementary foreign exchange reserve assets maintained by the International Monetary Fund.

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