Indonesian rupiah

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Indonesian rupiah
Rupiah Indonesia
Indonesian Rupiah (IDR) banknotes2009.jpg
Indonesian rupiah banknotes denominations (current circulating banknotes)
ISO 4217 code IDR
Central bank Bank Indonesia
 Website www.bi.go.id
Official user(s)  Indonesia
Unofficial user(s)  East Timorde facto 1
Inflation 4.61%, October 2012
 Source Bank Indonesia
 Method CPI
Subunit
 1/100 sen (obsolete)2
Symbol Rp
Coins
 Freq. used Rp 100, Rp 200, Rp 500, Rp 1000
 Rarely used Rp 50
Banknotes
 Freq. used Rp 1000, Rp 2000, Rp 5000, Rp 10 000, Rp 20 000, Rp 50 000, Rp 100 000
Printer Perum Peruri3
 Website www.peruri.co.id
Mint Perum Peruri3
 Website www.peruri.co.id
1) Although East Timor officially declared US Dollar notes and Centavo coins as its currency, a significant number of merchants and markets throughout the country accept Indonesian Rupiah for payment along with Australian Dollars.[1]

2) The sub-unit, sen, is now of little relevance due to its very low value. Prices and amounts of money are written as RpX.XXX,00 (note that decimal separator in Indonesia is comma) or more popularly RpX.XXX,-. Most price tags denote prices as RpX.XXX only (note that as the 25 rupiah coin is the smallest coin in use, rounding will often take place in supermarkets where are items are not necessarily priced in multiples of 25 rupiah). However, sen still exists in financial reports and bank statements.

3) Perum Peruri is an acronym of Perusahaan Umum Percetakan Uang Republik Indonesia (English: Money Printing Public Company of the Republic of Indonesia)

The rupiah (Rp) is the official currency of Indonesia. Issued and controlled by the Bank of Indonesia, the ISO 4217 currency code for the Indonesian rupiah is IDR. The name "rupiah" is derived from the Hindi word rupiyaa (रुपया), ultimately from Sanskrit rupya (रूप्य; wrought silver). Informally, Indonesians also use the word "perak" ('silver' in Indonesian) in referring to rupiah. The rupiah is subdivided into 100 sen, although inflation has rendered all coins and banknotes denominated in sen obsolete.

The Riau islands and the Indonesian half of New Guinea (Irian Barat) had their own variants of the rupiah in the past, but these were subsumed into the national rupiah in 1964 and 1971 respectively (see Riau rupiah and West New Guinea rupiah).

Current legal tender[edit]

The current rupiah consists of coins from 50 rupiah up to 1000 rupiah (1 rupiah are officially legal tender but are effectively worthless and are not circulated), and from banknotes of 1000 rupiah up to 100,000 rupiah. With US$1 worth 10,000 rupiah (August 2013), the largest Indonesian banknote is therefore worth approximately US$10.

Coins[edit]

Main article: Coins of the Rupiah

There are presently two series of coins in circulation: aluminium, bronze and bi-metallic coins from 1991–1998 and light-weight aluminium coins from 1999 onwards. Due to the low value and general shortage of small denomination coins (below 100 rupiah), it is common to have amounts rounded up (or down) or to receive sweets in lieu of the last few rupiah of change in supermarkets and stores.[2]

Indonesian rupiah coins[3]
Image Value Series Diameter Thickness Weight Material Obverse Reverse Availability
Obverse Reverse
IDR 50 Koin.JPG IDR 50 Koin.JPG Rp 50 1999 20 mm 2 mm 1.36 g Aluminium Garuda Pancasila Kepodang Bird and coin value Very Low
IDR 100 Koin.JPG IDR 100 Koin.JPG Rp 100 1999 23 mm 2 mm 1.79 g Palm Cockatoo Bird and coin value High
IDR 200 Koin.JPG IDR 200 Koin.JPG Rp 200 2003 25 mm 2.3 mm 2.38 g Bali Starling Bird and coin value
IDR 500 Koin 3.JPG IDR 500 Koin 3.JPG Rp 500 1991 24 mm 1.8 mm 5.29 g Aluminium Bronze Jasmine Flower and coin value Low
IDR 500 Koin 2.JPG IDR 500 Koin 2.JPG 1997 1.83 mm 5.34 g Medium
IDR 500 Koin.JPG IDR 500 Koin.JPG 2003 27 mm 2.5 mm 3.1 g Aluminium High
IDR 1000 Koin 2.JPG IDR 1000 Koin 2.JPG Rp 1,000 1993 26 mm 2 mm 8.6 g Bi-metal, nickel and aluminium bronze Palm Tree and coin value Low
IDR 1000 Koin.JPG IDR 1000 Koin.JPG 2010 24.15 mm 1.6 mm 4.5 g Nickel plated steel Garuda Pancasila and coin value Angklung and Gedung Sate High (mintage 719 million)[citation needed]

Banknotes[edit]

Currently circulating Indonesian banknotes date from 2000 (1000 rupiah), 2001 (5000 rupiah), 2004 (20,000 and 100,000) rupiah, 2005 (10,000 and 50,000 rupiah), 2009 (the new denomination of 2000 rupiah), 2010 (revised version of the 10,000 rupiah), and 2011 (revised versions of the 20,000, 50,000 and 100,000 rupiah). The 1998–1999 notes have no longer been legal tender since 31 January 2008 (but will be exchangeable until 31 January 2018 at Bank Indonesia). Earlier notes are also no longer legal tender, due to the lack of security features and association with the Suharto regime[citation needed], but could be exchanged in Bank Indonesia offices until August 20, 2010.[4]

As the smallest current note is worth approximately US$0.10, even small transactions such as bus fares are typically conducted with notes, and the 1,000 rupiah note is far more common than the 1,000 rupiah coin. The government initially announced that this would change, with a 2000 rupiah note to replace the 1000 rupiah, with that denomination replaced by a coin.[5] After a long delay, this proposal was revised so that the 2000 rupiah banknotes was launched by BI (Bank Indonesia) on 9 July 2009, with the banknotes circulating as legal tender from 10 July 2009,[6] but without withdrawing the 1000 rupiah note.

Due to the low value of the (older series) notes below 1000 rupiah, although they are no longer being circulated, some remain in use in increasingly poor condition, as low denomination 'uang pasar' (literally market money), outside the banking system for use in informal transactions.

Rupiah notes '2000'—'2010' series
Image Value Main Colour Description Date of issue
Obverse Reverse Obverse Reverse
Indonesia 2000 1000r o.jpg Indonesia 2000 1000r r.jpg Rp1,000 Turquoise Captain Pattimura Maitara and Tidore Islands, with fishermen on a boat November 29, 2000
Indonesia 2009 2000r o.jpg Indonesia 2009 2000r r.jpg Rp2,000 Brown Antasari, Prince of Banjar Dayak dancers (South Borneo) July 9, 2009
Indonesia 2001 5000r o.jpg Indonesia 2001 5000r r.jpg Rp5,000 Yellow Tuanku Imam Bonjol Songket weaver, Tanah Datar November 6, 2001
Indonesia 2005 10000r o.jpg Indonesia 2005 10000r r.jpg Rp10,000 Red-Purple Sultan Mahmud Badaruddin II The traditional Limas House of Palembang, South Sumatra October 18, 2005
Rp10,000 Blue-Purple July 20, 2010[7]
Indonesia 2004 20000r o.jpg Indonesia 2004 20000r r.jpg Rp20,000 Green Oto Iskandar di Nata Tea plantation, West Java December 29, 2004
Indonesia 2005 50000r o.jpg Indonesia 2005 50000r r.jpg Rp50,000 Blue I Gusti Ngurah Rai Pura Ulun Danu Bratan, Bali October 18, 2005
Indonesia 2004 100000r o.jpg Indonesia 2004 100000r r.jpg Rp100,000 Red Sukarno and Hatta DPR/MPR Building December 29, 2004
These images are to scale at 0.7 pixels per millimeter.

Security features[edit]

Collection of 50,000 rupiah bills clearly displaying the security threads.
  • The materials of the banknotes basically are long fibres from any kind of wood, or a mix of different types of wood. However, the preferable material is the Abaca fibre, which is naturally plentiful in Indonesia and is believed to increase the durability of the banknotes. The banknotes are made with the process of heating, to create a unique type of pulp.
  • The minimum security features for naked eyes are watermarks, electrotypes and security threads with color fibres. In addition to this, extra features may be included, such as holograms, Irisafe, iridescent stripes, clear windows, metameric windows and gold patches.
    • Watermark and Electrotype are made by controlling the gap of density of the fibres which create certain images for the banknotes. This is done to raise the quality of the notes from the aesthetic view.
    • Security threads are put in the middle of the note's materials so horizontal and vertical lines are shown from top to bottom. The threads also can be made with many variations such as the materials, size, color and design.
    • Intaglio Printing are put in the denomination numbers in the banknote, to make the blind people recognize the real money.
  • The 2010 10,000 rupiah, 2011 20,000, 50,000 and 100,000 rupiah introduced several new security features: use of EURion constellation rings, rainbow printing designed to change colour when viewed from different angles, and tactile features for blind people and those with visual difficulties to recognize the different denominations stated on the notes.

History[edit]

Exchange Rate and inflation[edit]

The rupiah has been subject to high inflation for most of its existence (which as an internationally recognised currency should be dated to 1950). Various attempts have been made to maintain the value of the currency, all were abandoned.

1946–1949 revolutionary period[edit]

In the period from October 1946 to March 1950 Indonesian currency had no international recognition. Its value was determined on the black market.

1949–1965 foreign exchange restrictions[edit]

The exchange rate determined upon independence in 1949 was 3.8 rupiah to one US$. Lembaga Alat-Alat Pembajaran Luar Negeri Publication #26 of March 11, 1950 (effective March 13) established the Foreign Exchange Certificate System.[8] By the trade in certificates an export rate of 7.6rp and an import rate of 11.4rp was established.

The FECS was scrapped on 4 January 1952, by which time the government had been able to reduce its deficit by 5.3 billion rupiah through the exchange differential. The system was scrapped because domestic prices were being determined by the import rate, which were hurting profits from exports earned at the lower rate. Hence the effective 7.6/11.4rp exchange rate reverted to 3.8rp.

The ending of what amounted to an export tariff severely damaged government revenues, and as of 4 February 1952, the rupiah was officially devalued to 11.4rp, with export tariffs of 15–25% on commodities that Indonesia was strong in. Weaker commodities were not subject to tariffs, and from 1955 were actually given a premium of 5–25% to boost their export.

In order to control foreign exchange, the government brought in a number of measures. 40% of the foreign exchange requirements of importers were required to be paid to the government from April 1952, while as from September 1952 the government decided to provide only a limited amount of foreign exchange, made available every four months. These foreign exchange restrictions, designed to provide the government with much needed reserves meant that some companies were operating at as low as 20% of capacity, due to lack of needed imported materials.

Further foreign exchange restrictions were introduced over 1953–1954, with April 1953, the foreign exchange downpayment was increased to 75%, except for raw materials at 50%. Foreign companies and their workers were placed under restrictions as to the amount of foreign exchange that could be sent home, with the amounts allowed out subject to fees of 66⅔%. As of November 1954, exporters were required to sell 15% of their foreign exchange earned to the government.

An increasingly complex set of tariffs on imports were unified in September 1955 with a set of Extra Import Duties, requiring downpayments to the government of 50%, 100%, 200%, or 400% of the value of the goods.

The official 11.4 rp rate, which massively overvalued the rupiah, was a major incentive to black market traders, and also contributed to anti-Java feeling, given that those producing raw materials on the large material-rich outer islands were not receiving fair value from their goods due to the exchange rate, diverting funds to the government Java. The black-market rate at the end of 1956 was 31rp, falling to 49rp at the end of 1957, and 90rp by the end of 1958.

In response to Sumatra and Sulawesi refusing to hand over their foreign exchange, in June 1957 a new system for foreign exchange was introduced: exporters received export certificates (BE) representing the foreign currency earned and could sell them to importers on the free market (but subject to a 20% tax). This effectively created a freely floating rupiah. The price of the certificates quickly reached 332% of face by April 1958, i.e., 38rp, a rate at which the government chose to end the free market, fixing the price at 332% of face value.

The currency devaluation of large notes in 1959 saw the official exchange rate devalued to 45rp as of August 1959. Despite this, the fundamental issues with the fixed exchange rate system and severe import controls (which saw cotton mills running at only 11% of capacity due to lack of imported raw materials) were not addressed, and smuggling grew, often backed by the army, while assets were moved offshore by overinvoicing.

The government maintained price controls over goods and raw materials, with the official oil price unchanged 1950–1965.

After the 1959 devaluation, inflation, which had been running at a relatively high 25% per annum 1953–1959 really took off, with rates over 100% in 1962, 1963, and 1964, and 600% in 1965. Despite the official 45rp to 1 US$ rate, two further export certificate trading systems, of March 1962 – May 1963, and then from April 1964 onwards, showed premiums of 2,678% July 1962 (1205rp effective rate), 5,100% August 1965 (2295rp) and 11,100% in November 1965 (4995rp).[9]

1966–1971 stabilization and growth[edit]

The last demonetization of rupiah notes occurred in late 1965, at which time inflation was ravaging the economy: exports had dropped 24% 1959–1965, GDP growth was below population growth, and the foreign exchange reserves had fallen by over 90%. Inflation in 1965 was 635%. In late 1965, the 'new rupiah' was brought in, at 1000 to 1 to the old currency. The official exchange rate was set initially at 0.25rp to 1 US$ as of 13 December 1965, a rate that did not represent reality, as the multiple exchange rate system remained in place for the time being.

This was followed by the emergence of Suharto, who as of 11 March 1966 acquired executive control of Indonesia.

Suharto quickly made economic changes, establishing his 'New Order', with economic policy set by the Berkeley Mafia, his team of US-educated neoclassical economists. The policy began to be set out in November 1966, following the reaching of agreement with Indonesia's creditors in October 1966 on debt relief and loan restructuring. Economic policies were put in place to require adequate bank reserves, ending subsidies on consumer goods, end import restrictions, and to devalue the rupiah.

The 1966–1970 stabilization program was a great success, resulting in higher economic growth, boosting legal exports (which grew 70% in US$ terms over the period), and increasing output (for instance the price of oil rose 250 times when the 1950 prices were abandoned, incentivising new exploration). By 1971 inflation had fallen to just 2%.

Despite the liberalisation efforts, Indonesia still had multiple exchange rates. A more realistic exchange rate was finally established of 378 (new) rupiah to 1 US$ as of April 1970. In August 1971 the exchange rate was devalued slightly, to 415rp to the US$.

Fixed rate period 1971–1978[edit]

The 415 rupiah exchange rate to the US dollar, which had been established in August 1971 was fixed by government intervention in the currency market, buying and selling currency as needed.[10]

Despite the fixed rate, the failure of the rice crop in 1972, exacerbated by high world rice prices, and underordering by the government rice cartel, along with rising commodity prices caused inflation to rise above 20% in 1972, peaking at over 40% in 1974. The M1 money supply increased sharply over the period due to lax credit controls, which was channeled towards favoured groups, such as pribumi (non-Chinese Indonesians), as well as corrupt government-linked businesses.[11]

Despite the high inflation of the period, the exchange rate, which had essentially been preserved using the country's oil exports, was maintained at 415 rupiah until 15 November 1978.

Managed float period 1978–1997[edit]

1978–1986 devaluations[edit]

By 1978, the combination of a fall in oil prices and a decrease in foreign reserves meant that the rupiah was devalued 33% to 625rp to 1 US$ on 16 November 1978 (although prices had increased nearly fourfold over the period).

The government abandoned the fixed exchange rate, and altered economic policy to a form of a managed float. The exchange rate was published each day. At the point of devaluation (November 1978), the trade-weighted real (local price adjusted) effective exchange rate (REER) of the rupiah[11] against major world currencies was just over twice as high as it was in 1995 (prior to the Asian economic crisis, and free fall of the rupiah), i.e. the rupiah was highly overvalued at this point. By March 1983, the managed float had brought only an 11% fall in three and a half years to 702rp.

The continued overvaluation of the rupiah meant that Indonesia was beginning to suffering a trade deficit, as well as falling foreign exchange reserves. The government responded by devaluing the currency on 30 March by 28% to 970rp.

At this time the 1980s oil glut put the Indonesian economy was under pressure, with exports uncompetitive as a result of the overvalued currency, and oil contributing less as a result of lower global prices. On 1 June 1983, 'Pakjun 1983' brought deregulation of the banking system, and the end of the meaningless 6% official deposit rate, with a more market-based financial system. Credit ceilings were removed. Interest rates, initially 18%, remained above 15% over the period.

By September 1986 the currency had been allowed to steadily fall to 1134 rupiah, a rate which had largely maintained purchasing power over the period. Despite this, the currency was devalued 30% on 12 September 1986 to 1664 rupiah to 1 US$. As in 1983, this had been intended to boost the balance of trade: oil prices, $29 in 1983, fell by 50% in 1986 alone, to below $9 per barrel.

Thus in the period from 1978 to 1986, the real exchange rate of the Indonesian rupiah fell by more than 50%, providing significant boosts to the competitivity of Indonesia's exports.

October 1986 – June 1997: US$ real exchange parity[edit]

Although the devaluations of 1978, 1983 and 1986 had each successfully boosted the competitiveness of exports, devaluations have a destabilizing effect, and the September 1986 devaluation was the last carried out by Indonesia.

According to research,[12] despite an official 7-currency exchange basket, empirical evidence suggests that the rupiah was controlled by Bank Indonesia against the US$ alone, and indeed since the 1986 devaluation, the currency maintained near-constant purchasing power against the dollar up until the 1997 crisis, the steady fall of the rupiah against the dollar essentially representing the difference between Indonesian inflation and US inflation; hence, by June 1997 the rupiah had fallen from its post-devaluation rate of 1664rp to 2350rp, an annualized decline of slightly over 3%.

Asian Financial Crisis (and response) 1997–1999[edit]

First stage of the crisis – limited initial falls[edit]

The Asian Financial Crisis of 1997 began in Thailand, where the Thai Baht, fixed at 25 THB to 1 USD, came under attack in May 1997. By 2 July 1997 Thailand abandoned its defence of the baht, allowing it to float freely.

Indonesia, which had massive foreign reserves and was seen as having a strong economy, responded on July 11, 1997, by widening its exchange rate band from 8 to 12%. Indonesia had taken similar actions previously, in December 1995 from 2 to 3%, in response to the Mexican financial crisis, and in June and September 1996 from 3 to 5% and then 5 to 8%. These actions had been successful in the past in defending the rupiah, but on this occasion there was a more serious crisis of confidence.

The rupiah fell 7% immediately, with foreign money quick to leave the country, with investor confidence in Indonesia shaken (due to previous deregulations, much of the Indonesian stockmarket was owned by foreign investors). Local confidence in the currency was also undermined as the population decided to follow suit, selling rupiah for dollars.

The spot rate soon fell below the selling rate (i.e. outside the 12% exchange rate band), and despite Bank Indonesia's attempts to intervene, it soon abandoned the managed float, leaving the rupiah to float freely on August 14, 1997.

The rate, 2436 on July 11, was 2663 on August 14, and 2955 on August 15: a 12% fall. Government debt (Bank Indonesia Certificates or SBI) rose from 12% to 30%, and overnight call rates reached 81% (per annum).

Response to the falls – crisis[edit]

At this stage the crisis was a limited one: while the currency had fallen, the extent of the fall did not look to be catastrophic. The government announced its response in September: the banking sector was to be restructured, government projects would be cancelled, and some banks were supported with liquidity from the government.

The government reduced the SBI rate three times in September to around 20%. As of 24 September, the exchange rate still lingered around 3000, at 2990.

The government response to the crisis sent mixed messages, with falling interest rates doing nothing to support confidence in the rupiah, and the rupiah continued to be sold, as companies who had been borrowing heavily in dollars had to meet their obligation. By October 4, the rupiah had collapsed a further 19%, falling to 3690 rupiah. The rupiah had now lost a third of its value, and there was now a full-blown 'krisis' in Indonesia.

On 8 October with the rupiah at 3640, the government decided to seek the support of the IMF. The rupiah fluctuated in the 3300–3650 range during October awaiting the IMF's response.

The response was announced on 1 November 1997. Sixteen small and insolvent banks would be closed, with a small market share of only 2.5%. Deposits would be underwritten up to 20 million rupiah (90% of all depositors had less than this in the bank). Private banks would be subject to improved monitoring, and some state banks would be merged.

The rupiah immediately gained almost 10% against the dollar, to around 3300, as the markets signalled their approval.

Soon after, however, confidence began to fall. The IMF response had only been published in summary form from the government and Bank Indonesia, and the choice of the sixteen banks being closed appeared arbitrary, and the details of the thirty-four others subject to special measures was not announced.

The deposit guarantee of 20 million rupiah was seen as inadequate, and funds were moved from private to state banks, exchanged for dollars, or transferred offshore, as confidence in the plan began to evaporate.

The rupiah steadily weakened from the middle of November, standing at 3700 rupiah at the end of the month. In December the crisis turned into a disaster. Much of the Indonesian economy was controlled (indeed, in 2008, much of it still is) by relatives of the President Suharto, and of the sixteen banks to be liquidated, PT Bank Andromeda was 25% owned by Bambang Trihatmodjo, the second son of Suharto, PT Bank Jakarta was part-owned by Probosutedjo, the President's half-brother, and PT Bank Industri was 8% owned by the President's second daughter, Siti Hediati Prabowo.[13]

The President and his family were opposed to the reforms, with Bambang Trihatmodjo beginning legal action against the government to keep his bank, particularly as directors of the insolvent banks were, if culpable, to be added to a Disgraced Persons List, ineligible to work in the banking sector. Although the bank had violated its BMPK (credit limit), Bambang was given permission by Bank Indonesia to buy Bank Alfa, another bank, seen by many as a reward for withdrawing his lawsuit. In effect, the failed bank was reopened under a different name.

It was clear that the cronyism and corruption of Indonesia was winning over IMF reforms. The rupiah fell from 4085 to 5650 in the space of a single week. By the middle of the month, half the banking system, 154 banks, had suffered bank runs. By Christmas Eve the rupiah stood at 5915: a fall of 60% since July.

The New Year saw the rupiah begin at 5447. On January 15 a second Letter of Intent was signed with the IMF, agreeing an accelerated reform package in return for $43 billion of aid. The rupiah had strengthened from an all-time low of 9100 on 23 January to 7225 on 15 January, but it soon became clear Suharto had no intention of fulfilling the agreement. The rupiah plummeted by more than 50%, bottoming out at 14800 on January 23. The amount of liquidity pumped into the banking system was by now over 60 trillion rupiah, causing money supply increases and worsening inflation.

The government announced a rescue package on 26 January,[14] ensuring that the government would guarantee all existing deposits. The Indonesian Bank Restructuring Agency was set up with the goal of merging, closing, or recapitalising (before sale) banks.

Fifty-four banks (four state, fifty private), representing nearly 40% of the sector were placed under IBRA supervision in February 1998, with a resulting strengthening of the rupiah to 7400.

Despite the improvements, it was not long before confidence was undermined again, as Suharto discussed a currency board, the IBRA head was replaced, and political instability increased. The currency fell to around 10000.

Indonesia began to take more drastic action, doubling its SBI rates to 45% (increasing the cost of its lending), and in April, having signed a third Letter of Intent with the IMF, the IBRA took over the major private banks, twinning the banks with state banks, and suspending the owners' control. The rupiah, which had strengthened to around 8000, depreciated in the wake of the Jakarta riots of May 1998, and in particular the run on the Bank Central Asia, Indonesia's largest private bank that ensued, causing the bank to be taken over by IBRA on 29 May. The SBI rate was increased to 70% in the wake of massive inflation.

The end of Suharto's rule brought a new President, Jusuf Habibie, to power on 21 May 1998. Little action was seen immediately, and by 17 June the rupiah had bottomed out at 16800 rupiah.

A fourth Letter of Intent was signed with the IMF, on June 25, 1998, which was refusing to provide aid due to breaches of its original agreement. The IMF agreed to provide an immediate $5 billion of aid to cover basic necessities.

Audits of the banks that had been taken over showed massive bad debts, exceeding 55%. Further audits showed that the other banks were also fundamentally weak. Banking reform continued through to 1999, with the merger of 4 state banks in October 1998, into Bank Mandiri, the closure of 38 banks in March 1999, recapitalisation of 9, and take over of 7 more. By this point total bank capital had reached negative 245 trillion rupiah. 23 further banks were recapitalised in May, and in October 1999 Bank Mandiri itself was recapitalised. Interest rates fell steadily in 1999, to an SBI of 13.1% in October. The rupiah finished the year at 7900 to the US Dollar.

Despite the fall of the currency of about 70% from June 1997 to December 1998, inflation of 60–70% (which caused riots, and the end of the Suharto regime after 30 years in power) in 1998 meant that the real exchange rate fell only slightly.

Rupiah since 1999: relative stability[edit]

The rupiah declined from its relatively strengthened position at the end of the financial crisis, with the rupiah seeing the start of 2000 at 7,050 to the US$, but declining to 9,725 by the end of 2000, and reaching a low of 12,069 on 27 April 2001. The currency strengthened to 8,500 later in 2001, but ended 2001 at 10,505. March 2002 saw the currency break below 10,000, from which point the currency maintained a rate in the 8000s and 9000s until August 2005, and in the latter half of that year, the trading range extended towards 11,000, but ending the year just below 10,000. 2006 and 2007 saw the currency trade in a relatively narrow range against the US$ (which itself was depreciating against other currencies), of 8500–9900. This trend continued into 2008, with the currency trading between 9000 and 9500.[15]

The Financial crisis of 2007–2008 with the collapse in the commodities market saw the US$ gain strongly against currencies backed by weakening commodities exports. With palm oil and rubber prices falling from their peak by more than half, the rupiah came under pressure, Bank Indonesia spent $7 billion of its $57 billion reserves in October defending the currency.[16] Despite this, the rupiah slipped below 10,000 on 23 October for the first time since 2005, and then below 11,000 on 2 November, a mark last reached in 2001. On November 13, Bank Indonesia introduced new regulations requiring foreign currency purchases over $100,000 a month to be backed by documentation of an underlying transaction and a tax number. The rupiah closed below 12,000 for the first time since 1998 on 20 October, with intraday lows below 13,000 hit. Subsequently, however, the cut in the Federal Reserve rate to 0–0.25% and Bank Indonesia support for the currency, saw the rupiah strengthen slightly to a range around 11,000.

The catastrophic damage to the rupiah caused in 1997–1998 severely damaged confidence in the currency. Even though the rupiah is freely convertible currency, it is still regarded as a risky currency to hold. As of 1 January 2011, one United States dollar is worth approximately 9,000.00 Indonesian rupiah,[15] and it was one of the least valued currency units in the world.

2014 – Redenomination[edit]

Indonesia's Central Bank has announced that the rupiah would be redenominated by removing three zeros starting 2014. The existing rupiah will be phased out by the end of 2018. During the transition period, the old and new currency notes will stay valid.[17]

As of August 2013, the plans are delayed or on hold recently because of other monetary problems gaining higher priority like inflation and foreign divestment.[18]

Current IDR exchange rates
From Google Finance: AUD CAD CHF EUR GBP HKD JPY USD INR CNY SGD
From Yahoo! Finance: AUD CAD CHF EUR GBP HKD JPY USD INR CNY SGD
From XE.com: AUD CAD CHF EUR GBP HKD JPY USD INR CNY SGD
From OANDA.com: AUD CAD CHF EUR GBP HKD JPY USD INR CNY SGD
From fxtop.com: AUD CAD CHF EUR GBP HKD JPY USD INR CNY SGD

See also[edit]

References[edit]

  1. ^ Dave Owens in East Timor. Jobsletter.org.nz. Retrieved on 2011-07-28.
  2. ^ Bank to redenominate rupiah[dead link]
  3. ^ Instrumen Tunai. Bank Indonesia
  4. ^ Bank Indonesia says Suharto banknotes invalid from Aug. 21 | Asian Economic News | Find Articles at BNET. Findarticles.com. Retrieved on 2011-07-28.
  5. ^ News. Jawaban.Com (2008-03-03). Retrieved on 2011-07-28.
  6. ^ Siaran Pers No.11/ 19 /PSHM/Humas – Bank Sentral Republik Indonesia. Bi.go.id (2009-07-09). Retrieved on 2011-07-28.
  7. ^ Indonesia new 10,000-rupiah note confirmed BanknoteNews.com. September 9, 2010. Retrieved on 2013-02-26.
  8. ^ http://www.bi.go.id/msmbiweben/pra_content.asp?id=22[dead link]
  9. ^ http://users.erols.com/kurrency/asia.htm[dead link]
  10. ^ Indonesia Monetary and Exchange Rate Policy – Flags, Maps, Economy, History, Climate, Natural Resources, Current Issues, International Agreements, Population, Social Statistic. Photius.com. Retrieved on 2011-07-28.
  11. ^ a b Microsoft Word – 45839C8F-327B-10B95E.doc. (PDF) . Retrieved on 2011-07-28.
  12. ^ http://165.194.73.110/newjed/full-text/24-2/siregar.PDF[dead link]
  13. ^ Richardson, Michael. (1997-11-06) He Starts Court Action After Reform Effort Shuts His Bank – Suharto's Son Sues Government – NYTimes.com. International Herald Tribune. Retrieved on 2011-07-28.
  14. ^ The Indonesian Bank Guarantee Program. Library.findlaw.com. Retrieved on 2011-07-28.
  15. ^ a b Indonesian Rupiah Rates Charts. Saxo Bank. Forex. Retrieved 2008-06-13.
  16. ^ / Currencies – Rupiah plunges after forex changes. Ft.com (2008-11-13). Retrieved on 2011-07-28.
  17. ^ Indonesia to cut 3 zeros off the rupiah. Investvine.com (2012-12-26). Retrieved on 2012-12-26.
  18. ^ http://bisniskeuangan.kompas.com/read/2013/08/02/1924240/Pelaksanaan.Redenominasi.Bisa.Molor%7C accessdate 26-08-2013
  • Krause, Chester L., and Clifford Mishler (1991). Standard Catalog of World Coins: 1801–1991 (18th ed.). Krause Publications. ISBN 0873411501. 
  • Pick, Albert (1994). Standard Catalog of World Paper Money: General Issues. Colin R. Bruce II and Neil Shafer (editors) (7th ed.). Krause Publications. ISBN 0-87341-207-9. 
  • Cribb, Robert, ‘Political dimensions of the currency question 1945–1947’, Indonesia 31 (April 1981), pp. 113–136. [cip.cornell.edu/handle/seap.indo/1107015200]
  • Katalog Uang Kertas Indonesia 1782–2005. P.T. Sugiya Abadi Sentosa. 2005. 

External links[edit]

Preceded by:
No modern predecessor
Currency of Indonesia
1945 –
Succeeded by:
Current