Indonesia’s rupiah topped 18,000 per US dollar for the first time on Thursday as the country was hit by rising energy costs and lawmakers passed a law expanding oversight of the central bank, raising concerns about its independence.
Bank Indonesia has tried to support the currency, which is under intense pressure due to growing concerns about the health of Southeast Asia’s largest economy.
However, on Thursday, the rupee breached the psychological barrier of 18,000 against the US dollar. The country’s stock market fell by almost four percent and lost a third of its value in 2026.
At the same time, Parliament approved legislative changes that expand the central bank’s mandate, including responsibility for economic growth.
It is also possible for MPs to evaluate the work of Bank Indonesia.
Purbaya Finance Minister Yudhi Sadewa said on Wednesday that the changes to the law are aimed at boosting economic growth and increasing global competitiveness as Indonesia’s economy faces a sharp rise in global oil prices.
– It is not just about exchange rate stability or inflation. It is also about economic growth and job creation – he said.
Economist Yose Rizal Damuri assessed that this move raises the issue of “independence”, especially if parliamentary intervention becomes “regular practice”.
– If independence is perceived as weakened, risk could increase risk premiums and put pressure on financial markets – added Chief Economist David Sumual.
Citizens welcomed the weakening of the rupee with concern.
“It will create inequality, a visible gap between those who earn in dollars and those who earn in rupees,” pensioner Diana Murdiana, 60, told AFP in the capital.
For civil servant Ryandi Febri Nurcahyo, assurances from the authorities mean less and less.
– Our officials keep saying that the economic foundations are strong… Are they really that strong? This rise in the dollar affects both the lower and middle classes. It may not have much influence on those at the top – he said.
(Vijesti.ba)
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