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As part of this devaluation, a third series of Bank Indonesia notes was printed, dated 1958, the so-called 'manual workers' series of notes due to the theme on the face of the notes (the reverse showed diverse styles of Indonesian tribal houses). The first denominations, issued from 8 September 1959, were of 5 and 100 rupiah.
As part of this devaluation, a third series of Bank Indonesia notes was printed, dated 1958, the so-called 'manual workers' series of notes due to the theme on the face of the notes (the reverse showed diverse styles of Indonesian tribal houses). The first denominations, issued from 8 September 1959, were of 5 and 100 rupiah.


Yet another series of notes, the 'flowers' series was issued by Bank Indonesia in 1960 (showing flowers on the obverse and birds on the reverse), and dated January 1 1959. The circulation was from January 1960 for denominations of 5, 10, 25, 50, and 100 rupiah, and in May 1960 resuming the 500 and 1000 rupiah denominations, which had been withdrawn only 8 months earlier. These notes were printed by Thomas De La Rue & Co. Ltd., England, and are some of the most vibrant baknotes issued by Indonesia with the bright flowers contrasting with the more muted design on the note. A 2,500 rupiah of this series was never issued for circulation: only a few specimens in different colours exist.
Yet another series of notes, the 'flowers' series was issued by Bank Indonesia in 1960 (showing flowers on the obverse and birds on the reverse), and dated January 1 1959. The circulation was from January 1960 for denominations of 5, 10, 25, 50, and 100 rupiah, and in May 1960 resuming the 500 and 1000 rupiah denominations, which had been withdrawn only 8 months earlier. These notes were printed by Thomas De La Rue & Co. Ltd., England, and are some of the most vibrant baknotes issued by Indonesia with the bright flowers contrasting with the more muted design on the note. A 2,500 rupiah of this series was never issued for circulation: only available in PROOF (colour trial specimen) version.


A new design for the 1 and 2½ rupiah government notes was issued in 1960 showing agricultural workers, also re-dated with the new Minister of Finance's signature 1961.
A new design for the 1 and 2½ rupiah government notes was issued in 1960 showing agricultural workers, also re-dated with the new Minister of Finance's signature 1961.

Revision as of 14:42, 28 May 2008

Indonesian rupiah
rupiah Indonesia Template:Id icon
File:Indonesian Rupiah.jpg
Rupiah banknotes, only the Rp 1000 and Rp 5000 notes are current
ISO 4217
CodeIDR (numeric: 360)
Subunit0.01
Unit
SymbolRp‎
Denominations
Subunit
 1/100sen
Banknotes
 Freq. usedRp 1000, Rp 5000, Rp 10 000, Rp 20 000 Rp 50 000, Rp 100 000
Coins
 Freq. usedRp 100, 200, 500
 Rarely usedRp 25, 50, 1000
Demographics
User(s) Indonesia
Issuance
Central bankBank Indonesia
 Websitewww.bi.go.id
Valuation
Inflation8.17 %
 SourceBank Indonesia, March 2008

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 symbol used on all banknotes and coins are Rp. The name derives from the Indian monetary unit rupee. 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, but these were subsumed into the national rupiah in 1964 and 1971 respectively (see Riau rupiah and West New Guinea rupiah).

History of the Indonesian Rupiah

1600-1942 - Dutch Colonial Money

From the early 17th Century, the Dutch East India Company issued coinage (marked 'VOC', the Dutch East Indiea Company) in its territory of what was to become the Netherlands Indies. The firm went bust in 1800, and control over the territory reverted to The Netherlands. The first coins were struck in the name of what was then the Dutch government, the Batavian Republic, in 1802, with low-value copper duit coins, as well as silver and gold gulden coins. The gulden replaced various local currencies throughout the Indies, with the Sumatran dollar disappearing in 1824, and the Javan Rupee, which had been minted by the Dutch, in 1816. Some other kingdoms and Sultanates had their own coins until they fell under Dutch control, such as the Aceh keping (Aceh was finally conquered in 1903).

The currency would be considered very stable by modern Indonesian standards, with the financial instrument for day-to-day transactions being low-value coins. The first banknotes were issued in 1815 by the government. The central circulating bank was founded in 1828, 'De Javasche Bank' (The Javanese Bank), and began issuing banknotes in that year. The notes were generally issued in denominations of 5 gulden and above, with smaller transactions easily handled in coin.

Although the role of the government (to issue coin) and the circulating bank (to issue bank notes of 5 gulden and up) was well established, in 1919 the government began issuing 1 and 2½ gulden notes, to address the issue of metal hoarding, largely caused by World War 1. ½ gulden notes were added in 1920.

Upon the outbreak of World War II, gulden coins were once again hoarded, and the government issued 1 and 2½ gulden notes in 1941 to address the shortage (partly caused by supply problems from the coins, which were minted in The USA).

1942 - 1949 Japanese Invasion, and Indonesian independence - the dawn of hyperinflation in Indonesia

The Japanese Invasion

In 1942, the Japanese invaded the Netherlands Indies, taking control of the whole country, and Netherlands New Guinea, by March 1942. On their invading ships, they brought their own issue of the local money, the gulden. They liquidated the banks, including 'De Javasche Bank', and voided debt obligations.[1] The notes issued by 'De Japansche Regeering' (the Japanese government) would be legal tender from March 1942 (although the existing notes remained valid), with notes printed from 1 cent to 10 gulden, by the new (as of April 1942) circulating bank Nanpo Kaihatsu Ginko.

The Japanese money was supposed to be at par with the old Dutch money, and the old money recalled from use, but the invaders soon began to print excessive quantities of money, and it was quickly apparent that hyperinflation was in progress, and old Dutch money began to hoarded. By the end of the War, the Japanese had caused a massive increase in the money supply, which was 230 million gulden of notes pre-war, to several billion post-war. Along with the actions of the post-war Dutch war, there was massive inflation and damage to the economy of the country.

As their occupation continued, by 1944 the Japanese had determined that their long-term strategic interests were best furthered by encouraging Indonesian nationalism, and it issued a second series of notes printed in Indonesian language, the Netherlands Indies roepiah.

Even after the end of the war, the notes continued to be printed until early 1946 in parts of Eastern Indonesia, while the Dutch re-established their adminstration across the scattered islands of Indonesia.

Dutch/Allied re-occupation

The Dutch government, which was in exile in London, had been making preparations for the end of the war, whereupon it hoped to regain control over its colony. In order to do so, in recognition of the fundamentally altered financial conditions under which they would be issued, the notes were ordered in December 1942, printed in the USA by the Security Bank Note Printing Company. The notes were dated 'March 1943' were labelled as 'Nederlandsch-Indische Gouvernementsgulden' printed in Dutch, along with the additional Indonesian text indicating the denomination of the notes and the word 'roepiah'. Denominations were 50 sen to 500 gulden. In earlier years, such notes had been issued by the private De Javasche Bank, but with the damage to the banks, it was anticipated that a governmental issue would be needed instead.

At the end of the war, the Allies 'Netherlands Indies Civil Administration' (army), began to retake control of the old East Indies. It began issuing the 1943-dated money (the 'NICA gulden'), starting from 1944 in New Guinea, and subsequently in Maluku and Borneo, both of which were recaptured before the Japanese surrender in August 14th 1945. In areas under NICA control, pre-war Dutch notes were demonetized. Despite the fact that NICA had control over the outer parts of Indonesia, its authority to dictate the value of money was limited by the economic weakness of the administration and of The Netherlands itself. As a compromise NICA re-monetized the pre-war notes of 10 gulden and below, higher-valued notes not re-issued to reduce the inflationary effect of having the pre-war currency as well as new NICA money in circulated.

With the Japanese surrender, the administration was given official control of the institutions of the country by the Allies, and DJB, which had survived the war better than expected, was reincorporated on 10th October 1945.

Although the military action of the Allies in Eastern Indonesia and Kalimantan (Borneo) had introduced the NICA gulden into circulation in those areas, the transition back to Dutch control was not going to occur smoothly in the main islands of Java and Sumatra, and Allied military action gained control only over a few coastal enclaves, where Japanese money (large quantities of which were in storage by the Japanese).

The 'uang merah' ('red money' (the 10 rupiah note was red, and there may also be a reference to blood, as the money was unpopular with the Indonesian revolutionaries)) faced nationalist opposition to the principle of money issued by the Dutch, exarcebated by the fact that in spite of stated intentions to adopt a less colonial stance post-war, the notes had been printed in Dutch with a large picture of the Dutch Queen Wilhelmina.

When the first NICA money appeared in Java, Sukarno issued an immediate decree, of October 2 1945, to declare that the NICA notes were illegal.

With the lack of the kind of control needed to issue money effectively, the Dutch determined that it would be inadvisable to issue NICA money in the towns of Java and Sumatra, and prohibited their import.

With Japanese still acting as local government in Java and Sumatra, it was necessary for NICA to preserve the value of the Japanese money as much as possible, since it was the only means for them to pay the bills incurred in maintaining order. In many cases, the Japanese were instructed to simply print more money, and the Japanese currency in circulation continued to increase rapidly: the Japanese-originated inflation continued with increased pace. By February 1946, 2 billion Japanese money out of 2.5 billion captured in the state printers, had been spent, a vast sum against the entire pre-war circulation of less than 500 million gulden.

Due to the dwindling supplies of money, destruction of the printing plates at the main printers for re-issue, and disquiet amongst European forces at payment in Japanese money, which was losing value constantly, it was finally decided to issue the NICA gulden in Java on 6 March 1946. Pre-war notes of 5 gulden and below only were to retain validity, and the Japanese money was to be exchanged at a rate of 33 to 1.

This action enraged the Indonesians, who imposed a 5-year prison sentence on its use. One army regiment even went as far as to execute people carrying the money, hoisting their bodies in public with the money pinned onto them.

Due to the difficulties associated with using the money, the supply of food and basic goods from the Republican interior was poor, and the NICA money by June 1946 had fallen to a black market value of just 10 of the Japanese money (which was still the preferred money throughout Java), despite Dutch attempts to enforce the rate.

First notes of the Republic of Indonesia

Although the Republican government was firmly opposed to NICA money, seeing its exclusion as an important tool in the fight with the Dutch, the issue of its own money was slightly more considered.

After their October 2nd proclamation on NICA money, it declared the next day, that Japanese money as well as pre-NICA Dutch money would be legal tender in the Republic, at par. This parity reflected the fact that the Dutch money was no longer backed by gold reserves, the gold having been evacuated in the early part of the war.

The Indonesians had been advised by the British that an issue of Indonesian money would be financial and political suicide, but they had already decided to the contrary. The capture of their printing works and all the money in it by the Allies occurred in January 1946, but the printing plates survived, and with the action of the Dutch in introducing the NICA gulden in Java in March 1946, seen as an offensive act by the Indonesians, there was no impediment to their reprinting and issue. In addition, as with the Dutch, the Indonesians had obtained quantities of Japanese money from the vaults of the banks in the cities they controlled (approximately 600 million Japanese roepiah), and as with the Dutch, the supply was running out.

With only the small Malang printers, formerly of G. Kolff and Company, to print the money, printing of the money took several months, to July 1946.

The Republican government declared that the new central bank of Indonesia would be Bank Negara Indonesia, established on 5th July 1946, occupying the offices of De Javasche Bank in Yogyakarta.

Consequently, the Indonesian rupiah was eventually issued by proclamation of October 3 1946. In the year or so prior, the Japanese money had been a vital conduit of Republican goods to the Dutch enclaves, but the decree bought this to an end: all Japanese money was to be deposited with Republic banks by October 30 1946. Providing the depositors could account for how the money was obtained, they would be entitled to new new 'Oeang Republik Indonesia' (ORI) at the rate of 50 to 1. This policy had been derived from the Dutch geldzuivering of Dutch Minister of Finance Pieter Lieftinck (later Executive Director of the World Bank and IMF), who had trained Sumitro Djojohadikusumo (who had returned to Indonesia along with many other educated Indonesians after the War) in economics at university in The Netherlands. As in The Netherlands, each citizen was to be issued with 1rp to kickstart the circulation of new money. Undeposited money after October was declared worthless. In addition, the new money was said to be worth 0.5 grams of gold, similar to the pre-war Dutch currency, although this was not backed by metal reserves, merely a statement of purchasing power.

Due to a fear that the money would not be returned, there was panic buying of goods in the days following the decree, and prices of food (in Japanese money) soared by up to 30 times, with the blackmarket exchange rate to the NICA gulden rising to 120 to 1.

With the end of Japanese money (in Java only: in Sumatra and nearby Banten, West Java, further from the central government control, the Republic still regarded it as legal tender) as a conduit between the Republican interior and Dutch enclaves, the Dutch were forced to act, ending the exchange of Japanese money on October 30 1946, to avoid a flood of unexchanged Japanese money being brought for exchange with NICA gulden.

Thus as of November 1946, there were only two issues of money in use in Indonesia, the 1943-dated NICA gulden, and the 1945-dated ORI. There was never an official exchange rate between the two currencies, but with popular support for the currency strong, the ORI money was initially worth 5 NICA gulden. The currency, however, depreciated fast, falling to 2 gulden within 1 week, as the market determined the fair rate for the money, and by the end of 1946 to par. By March 1947, it was worth half a gulden, and by July 0.3 gulden. This inflation was caused by the Republican government, which was printing money to meet its obligations in the face of limited income of its own. By January 1947, 310 million rupiah had been printed, half the entire pre-war gulden circulation.

Due to the limited printing capacity of the government, it focused printing on 100 rupiah notes. Limited supply of smaller notes meant that the 100 rupiah notes were worth less than a combination of smaller notes. Rampant forgery only served to exarcebate the inflation of the Indonesian money.

Despite laws put in place to stop hoarding of goods, confidence in the currency could not be maintained. In Jakarta, the Indonesian money was worth even less than elsewhere, as a consequence of the demand for NICA-denominated imported goods. Republican attempts to maintain the value of Indonesian money (which was largely backed by the supply of rice from inner Java) could only slow, rather than stop, its decline.

Dutch money of 1947-1949

New money was issued by the Dutch from July 1947, in the form of fully Dutch/Indonesian bilingual gulden/roepiah notes from 'De Javasche Bank'. These notes were dated 1946, and consisted of 5 (violet), 10 (violet), 25 (red) gulden notes.

The supply of these soon exhausted, and the administration remonetized all of the pre-War DJB and government money as well, circulating unissued paper still stored in the vaults. This caused a 50% increase in the amount of money in circulation from 1947 to 1949. The administration also issued bronze and silver coins in the original pre-war denominations, minted from 1943 to 1945 in the USA, but due to inflation, the coins were worth more as scrap, and many were melted into household goods and silver artefacts. As a result, it issued treasury notes instead, from December 1 1947, in 10 and 25 sen denominations. These notes were successful as they were in Indonesian (with Dutch and Indonesian on the reverse) and stated to have been issued by 'Indonesia' (being NICA), and continued to be utilised by the Indonesian government even after independence, until 1951, when Indonesia acquired its first coins.

Local banknotes of Republic of Indonesia, 1947-1949

As the Republican government never had effective control of Indonesia beyond Java, from 1947 it instructed its regional outposts in Sumatra to issue money to replace the Japanese money from 1947. With the Dutch military action of July 1947 routing the Indonesians in much of Java as well, a smaller number of issues were made in cities of Java.

The notes were marked with the place of issue and were in different designs from the national money.

Banknote series of the Republic of Indonesia, 1945-1949

Republic of Indonesia banknotes - series 1, '1945'

The first 'Indonesian rupiah' bank notes bore the date of the proclamation on new Indonesian money, 17th October 1945, under the authority of the "Republik Indonesia", and were apparently intended for issue on February 1st 1946, but due to the capture of most of the notes, only a tiny number escaped at this time.

The circulation began in earnest in Java from October 10th 1946. The notes were in denominations of 1, 5, and 10 sen notes, plus ½, 1, 5, 10, and 100 rupiah notes.

1945 Republik Indonesia series
Image Value Dimensions Main Colour Description Date of Remarks
Obverse Reverse Obverse Reverse Watermark Serial printing issue withdrawal
File:Indonesia 1945 1s Obv.jpg 1 sen 97 × 45 mm Green Keris Legal text with wings None None 1946 October 10 1946 May 1 1950 Violet underprint
    Green underprint
    5 sen 100 × 49 mm Violet Various leaves Legal text with wings Buffalo underprint (strong)
Dark blue Buffalo underprint (faint)
10 sen 105 × 51 mm Black Keris and machete underprint Legal text Narrow borders
    Brown
    Wide borders
    1/2 rupiah 119 × 58 mm Green Horned motif Legal text Six numbers two letters [01234]nnnnn [LMNPRST][PRTUVWX] Pink underprint
Orange underprint
1 rupiah 138 × 65 mm Blue Sukarno, volcano Volcano, legal text Some without serial, some with six-digit, two-letter serial (1st letter is check code), some with simple two letter code  
5 rupiah 148 × 71 mm Green Rice stalk, Sukarno Rikce stalks, legal text Six numbers, two letters, first letter is check code; two different serial printing styles  
10 rupiah 160 × 77 mm Blue Sukarno, volcano Legal text Six numbers, two letters, or Six numbers, three letters. First letter is check code. Several serial printing styles  
100 rupiah 174 × 86 mm Blue/green Sukarno, keris, horns Legal text, horned '100' Five numbers, two letters, first letter is check code.  
These images are to scale at 0.7 pixel per millimetre. For table standards, see the banknote specification table.
Republic of Indonesia banknotes, Series 2, '1 January 1947'

The second series of money now eminated from 'Djokjakarta', the Republic's base following the 'Police Action' of July 21 1947, which had confined the Republicans to Yogyakarta and Central Java. The notes were dated January 1 1947, in denominations of 5, 10, 25, and 100 rupiah.

Republic of Indonesia banknotes, Series 3, '26 July 1947'

The next new issue was dated 26th July 1947, and consisted of ½, 2½, 25, 50, 100, and 250 rupiah notes.

Republic of Indonesia banknotes, Series 4, '23 August 1948'

New notes were issued by the national government in 1948, in the bizarre denominations of 40, 75, 100, and 400 rupiah, plus an unissued 600 rupiah note.

On 19 December 1948, the Dutch seized Yogyakarta, reverting the head office of the Republic's central bank, Bank Negara Indonesia, back to De Javasche Bank, with DJB offices also reopened in Solo and Kediri.[2]

It was planned in 1949 to revalue the national rupiah notes of the republic (which were at this time circulating in Java). To do this, "Rupiah Baru" ('new rupiah') notes were printed. This revaluation did not take place in Java, but some were issued in Aceh instead. The denominations printed were 10 sen (blue or red), ½ (green or red), 1 (purple or green), 10 (black or brown), 25, and 100 rupiah.

File:Firstrupiahs.JPG
Early rupiah - Netherlands Indies Roepiah, Java rupiah, 1950s rupiah coins, and 1959 rupiah notes

1950-1958 Recognition of Indonesian independence: rupiah devaluation

In November 1949, the Dutch-Indonesian Round Table Conference held in The Hague, brokered peace and recognition independence for the Indonesian state. As part of the accord, it was provided that The Netherlands was to retain economic influence over the republic until Indonesia had paid the debt run up by NICA in fighting the war with Indonesia. It was agreed that private Dutch-owned De Javasche Bank was to remain as the central bank of Indonesia, despite resentment among Indonesian nationalists.[3]

The new "Republik Indonesia Serikat" (with Queen Juliana as head of state) decided to address the amount of money circulating (due to the treaty the government was required to accept the NICA gulden as legal tender as well), which had reached 3.9 billion rupiah. A bewildering variety of money was in circulation, including local and national rupiah, Japanese, pre-war, and NICA Dutch monies.

Due to the large amount of currency, the new government sought to reduce the money supply by one half. This reform was decreed from 19th March 1950. It did this literally, by cutting the banknotes of 5 gulden and above in half, with the left half replaced with new legal tender notes worth half the face value of the old note, and the right half redeemed for an Indonesian government bond.

Along with this demonetisation, the 1946-dated DJB note series was revised (the design and dates were the same), with the 5 gulden note changing to brown, 10 gulden to green, and 25 gulden to green. In addition, 50 gulden (blue), 100 gulden (brown), 500 gulden (red), and 1000 gulden (black) notes were added, still dated 1946.

DJB notes of 1/2 rupiah, 1 rupiah, and 2 1/2 rupiah were added, dated 1948. These notes were of new design, with the Indonesian text ('roepiah') placed above Dutch ('gulden'). Collectively these notes are known as the 'Java Rupiah'. Old Dutch notes below 5 gulden remained as legal tender.

In addition to these DJB bank notes, the "Republik Indonesia Serikat" passed legislation on June 2nd 1950 to allow it to issue new treasury notes, which were dated 1 January 1950 in 5 and 10 rupiah denominations.

As part of the exchange, local and Republik Indonesia money was also demonetized, with all old Republik Indonesia notes no longer valid after May 1 1950. 125 Rp of the first "Republik Indonesia" rupiah (issued in Java) was exchanged for 1 Rp of Republik Indonesia Serikat. Higher exchange rates were in place for local currencies, some of which had been heavily devalued by the over-printing of money by the army. The recently devalued Rupiah Baru of Aceh were exchangeable at 1.75 to 1.

The Indonesia Serikat arrangement did not last long, with the RIS dissolving on 17 August 1950 (5 years after the original declaration of independence).

Sen coinage

The 1 and 5 sen coins had centre holes, similar to the old copper coins of the Dutch, while the other coins were solid. All were aluminium except the 50 sen, which was copper-nickel. All but the 50 sen featured Arabic on one side and Indonesian on the other.

Due to inflation, 1 sen coins were found to be worthless, and only 100,000 were minted, all dated 1952. The 1 sen coin shows rice stalks around the hole, and the words "INDONESIA 1952" "1 Sen" on the obverse and the Arabic text for 'Indonesia' on the reverse written in a circle around the central hole.

The 5 sen coins survived a little longer with coins issued dated 1951 and 1954. The design was the same as the 1-sen coins but on a larger coin.

The 10-sen coin was first minted dated 1951, followed by a 1954 date change. 50 million coins were minted dated 1954. The design for this coin shows the words "INDONESIA" "1951" or "1954" around the outside of the obverse with a central "10 SEN" in a scalloped design. The reverse shows the Garuda Pancasila with Arabic text for 'Indonesia' atop.

A revised coin dated 1957 replaced the Arabic with the word "INDONESIA" and again 50 million coins were minted.

The 25-sen coin was dated 1952, with 250 million coins in total issued. The design was the same as the 10-sen coin but larger, with "25 SEN" replacing "10 SEN" The coin was updated with the Arabic script replaced by Roman script, but no other design changes. 25 million of these revised coins were minted dated 1955, and 100 million dated 1957.

The 50-sen coin had the most designs as it survived the high inflation the longest, with the initial design showing "INDONESIA" 1952 "50 SEN" on the obverse, in the same manner as the 10- and 25-sen coins, and "DIPA NEGARA" with a picture of Diponegoro and Arabic text on the reverse. 100 million 1952 coins were minted.

Variations exist dated 1954 (1.29 million minted) and 1955 (15 million). The 1957 mintage excised the Arabic text as well as varying the picture of Diponegoro. 26 million were minted. For 1958 the coin was debased, with aluminimum replacing copper-nickel. The redesigned coin saw Garuda Pancasila replacing Diponegoro, with a simpler obverse design stating "REPUBLIK INDONESIA 1958" with the central "50 SEN" no longer scalloped. 34 million were minted dated 1958, 100 million dated 1959, and 150 million dated 1961 - the last sen coinage to be issued in Indonesia.

Gold 25 Rupiah

A variation of the 1952 50 sen coin was issued in gold with a officla value of 25 rupiah (although no value on the coin). The coin varied from the 50-sen by featuring the logo "BEKERDJA-MENABUNG-MEMBANGUN" and the Garuda emblem instead of the year and denomination.

Nationalisation of De Javasche Bank, the birth of Bank Indonesia

Due to the desire to remove the influence of the DJB, which was dominated by Dutch, and was felt to be unwanted foreign influence on the country, and the inflamed tensions caused by the refusal of the Dutch to transfer the territory of Dutch New Guinea to the Republic, the government moved to nationalize the Dutch bank. This action, announced on 30 April 1951, involved the repeal of the old Java Bank Law of 1922, preventing non-Dutch citizens from owning shares in the bank, and negotiations with the Amsterdam Stock Exchange. The purchase was agreed at 120% of the value of the bank (which was valued at 9 million Dutch gulden), with Dutch opinion holding that the bank was properly an Indonesian asset, and hence nationalisation was a valid action. The nationalisation was completed on 15 December 1951, with DJB becoming a government institution of Indonesia.

In addition to this act of nationalisation, on 3 October 1951, the republic passed an Emergency Act on valid currency, in order to repeal the Indische Muntwet Act of 1912, which still governed valid currency in Indonesia. The consequence of the new Act was that old Dutch coins would be void for payment,[4] and new coins would be issued with values of 1, 5, 10, 25, and 50 sen under the remit of the Indonesian government. All other banknotes were declared only temporarily valid, to be withdrawn from circulation in due course (under the law the government only had issuing power over notes and coins worth less than 5 rupiah). Notes with permanent validity would be government notes of 1 and 2½ rupiah denominations. Thus, 'Republik Indonesia' notes dated 1951 were issued in 1 and 2 1/2 rupiah denominations.

In order that it could discontinue the issue of the resented 'De Javasche Bank' money, the government completed the Indonesianisation of DJB, with the bank becoming Bank Indonesia on 1 July 1953 via the Principal Act on Bank Indonesia 1953. The bank had responsibility for the issue of banknotes of 5 rupiah and above (as had DJB). A side-effect of this was that the Emergency Act of 1951 was renewed as the Currency Act of 1953, and the 1951 1 and 2½ rupiah government notes were reissued with the signature of the new Minister of Finance dated 1953.

Notes featuring the name of the new bank ('Bank Indonesia'), had been prepared dated 1952, in denominations of 5, 10, 25, 50, 100, 500, and 1000 rupiah. The notes were circulated as soon as Bank Indonesia came into being, with 5 and 10 rupiah denominations circulated from 2nd July 1953, 100 and 500 rupiah from 18 December 1953, 25 rupiah from 18 June 1954, 50 rupiah from 13 August 1954, and 1000 rupiah from 2 November 1954.

Despite the new notes, which meant that paper bearing the name of DJB was no longer printed, DJB (the legal tender notes of which at this point had first circulated in 1950, dated '1946') money remained legal tender right up to the 'new rupiah' of 1965 (which invalidated ALL previous money at that point), although some old DJB notes were repealed, as follows:

  • 2 March 1956: 1000 gulden '1946' note dating from 1950 withdrawn, effective 5th March 1959, due to rampant counterfeiting.
  • 22 November 1957: 1 and 2 1/2 rp '1948' DJB notes withdrawn, effective 1 December 1957, due to the fact that these denominations of notes were the issuing privilege of the Dutch government at the time, and hence the money was deemed never to have been legal.

The repeal of the remaining Netherlands Indies government notes took place as follows:

  • 1 January 1954: all 'Nederlandsch Indie' government money withdrawn: 1/2, 1, and 2 1/2 gulden notes, all dating from early World War 2, 1940
  • 1 January 1957: 10 sen and 25 sen 'Indonesia' '1947' notes withdrawn (these were also issued by the Republic of Indonesia)

1954 brought a redesign of the Indonesian government 1 and 2½ rupiah notes, which were re-dated with the new Minister of Finance's signature in 1956.

The next series of Bank Indonesia notes was the so-called animal series due to their design, and were printed in 1957. They were printed in denominations of 5, 10, 25, 50, 100, 500, 1000, 2500, and 5000 rupiah, and in the case of the notes 1 - 1000 circulated 1958-1959. All of these notes were printed by Thomas De La Rue & Co. Ltd., England. The animal theme on this series of banknotes has made them popular with modern collectors, and all command good prices on the collectors' market.

The first notes to be circulated were the 100 and 1000 rupiah notes, circulated due to the counterfeiting of these denominations of the 1952 series (the counterfeit notes can be distinguished by the wavy line watermark being printed onto the paper rather than a true watermark). As a consequence, the 1952 1000 rupiah note was withdrawn on 7 August 1958, to be replaced by a new 1000 rupiah depicting an elephant as of 2nd September 1958.

The 100 rupiah notes, with the image of a squirrel, were issued from 24 June 1958. The old 1952 100 rupiah notes remained valid tender until December 1960.

The other note to be introduced in this period was the 500 rupiah 'tiger' note, issued from 6 January 1959.

August 1959-1964: currency devaluation

The Indonesian economy remained in poor shape, ravaged by inflation, with prices having tripled from 1953-1959. The official exchange rate was devalued by 75% from 11.4 to 45 to the US$ (the unofficial rate, was around half of that, and it had been 3.8 to the dollar in 1949). As a consequence, 500 Rp and 1000 Rp notes were devalued 90% on 24th August 1959 to 50 and 100 Rp. The actual notes affected were the '1946' 500 gulden, and the '1952' culture and the 'animal' notes of 500 and 1000rp notes. They were replaced with 50 rp and 100rp notes. In this period, three more notes were brought into circulation from the animal series: the 5 rupiah 'monkey' note, from 1 September 1959, the 10 and 25 rupiah notes on 5 September 1959. The 10 and 25 rupiah notes were only circulated for 3 days, although they remained legal tender, and are today extremely rare. Due to the PRRI revolt, the 2500 rupiah 'animal' note (an iguana) was not circulated until September 1 1962, and the 5000 rupiah note was never issued at all. As a consequence of the devaluation, the largest notes in issue were the 100 rupiah note in 'squirrel' '1952' series.

As part of this devaluation, a third series of Bank Indonesia notes was printed, dated 1958, the so-called 'manual workers' series of notes due to the theme on the face of the notes (the reverse showed diverse styles of Indonesian tribal houses). The first denominations, issued from 8 September 1959, were of 5 and 100 rupiah.

Yet another series of notes, the 'flowers' series was issued by Bank Indonesia in 1960 (showing flowers on the obverse and birds on the reverse), and dated January 1 1959. The circulation was from January 1960 for denominations of 5, 10, 25, 50, and 100 rupiah, and in May 1960 resuming the 500 and 1000 rupiah denominations, which had been withdrawn only 8 months earlier. These notes were printed by Thomas De La Rue & Co. Ltd., England, and are some of the most vibrant baknotes issued by Indonesia with the bright flowers contrasting with the more muted design on the note. A 2,500 rupiah of this series was never issued for circulation: only available in PROOF (colour trial specimen) version.

A new design for the 1 and 2½ rupiah government notes was issued in 1960 showing agricultural workers, also re-dated with the new Minister of Finance's signature 1961.

The period December 1960 - January 1961 saw the end of the remaining Bank Indonesia notes of the '1952' series as legal tender.

Despite the 'flowers' notes of 1960, Indonesia decided to return to the 'manual workers' theme, adding 100, 500, and 1000 rupiah notes in 1961 (still dated 1958), completing the series with 25 and 50 rupiah notes in 1962. Confusingly, the 2500 rupiah note of 'animals' design was finally issued in September 1962. In October 1963, a 5000 rupiah note in brown was added as a further response to the high inflation of the period. Again, it was dated 1958.

August 1964 saw a new 10,000 rupiah note (red) added in the 'manual workers' theme, but dated '1964'.

In 1965, notes of the 'manual workers' notes were reissued, with the 25 (green), 50 (brown), and 100 (red) rupiah notes in new colours with the new date '1964' in the period March-May 1965. The 10,000 rupiah '1964' note was recoloured to be green. Finally in this period, in November-December 1965, the '1964' 100 rupiah was altered to blue, the '1958' 5000 rupiah to violet, and the '1964' 10,000 remained green but added the 'Garuda' arms on the right-hand side of the face of the note.

1965 onwards - 'new rupiah': the 1000 to 1 revaluation of the rupiah

In response to rampant inflation, which was 27% in 1961, but jumped to 174% in 1962, by 1965 was 600%, during Indonesian political turmoil of 1965, the 'new rupiah' was introduced on 13 December, 1965, at a rate of 1000 of the old unit.[1] The price index at the end of 1965 had been calculated at 363 times higher than in 1958, and prices had risen approximately seven times over the previous 12 months.[2] In real terms (i.e., with inflation taken into account), a labourer in Jakarta was estimated to have earned 40 per cent of his earnings in 1958.[3] Although the devaluation in notes was 1,000 to 1, prices were reckoned to fall by only 10 times.[5]

File:5000rupiah2001.JPG
5000 rupiah

This devaluation had the side-effect of unifying the currency, ending the Riau money (the Irian Barat rupiah lasted until 1971). [6]

Banknotes of the 'new rupiah', circulating 1965-1968

New notes were issued in denominations of 1, 5, 10, 25, and 50 sen showing 'Volunteers', dated 1964. These were a rather optimistic issue in that they had negligible value, and never saw significant circulation due the substantial failure of the devaluation.

In addition, notes showing Soekarno on their face, confusingly dated 1960, in denominations of 5, 10, 25, 50, and 100 rupiah were issued; the notes from 500 to 10,000 rupiah were deemed unnecessary due to the devaluation.

To complete the 'new rupiah', "Republik Indonesia" notes, in the same Soekarno design of 1 and 2 1/2 rupiah, were issued dated 1964.

Collectively, these notes repealed all banknotes that were circulating in Indonesia prior to this point.

Due to the limited effect of the devaluation, 500 and 1,000 rupiah '1960' Soekarno notes were eventually added, effective from 20th February 1967.

1968-1975: 'Sudirman' series of banknotes

By 1968 the Suharto New Order had been established, and Bank Indonesia, as of 1968 was given sole right to issue banknotes (including notes below 5 rupiah) as well as coins (which had previously been the issue of the central government).[7]

Hence, the new issue of banknotes, dated 1968, was of 1, 2½, 5, 10, 25, 50, 100, 500, 1,000, 5,000 and 10,000 rupiah, all eminating from Bank Indonesia. The notes featured the revolutionary hero General Sudirman, backed by various scenes of industry. As a result of this issue, the first 'new rupiah' notes (the '1960' Soekarno design), were withdrawn from circulation. The 1 and 2 1/2 notes were issued from January 1968 (to replace the government notes, which the government was no longer allowed to issue), 10 rupiah from April 1968, notes 5, 25, 50, 100, 500, and 1000 from January 1969, and the 5,000 (then worth ~US$13) and 10,000 (then ~US$26) from April 1970 (restoring notes to the same denominations that had been circulating prior the 1965 devaluation). The 1000, 5000, and 10,000 rupiah 'Sudirman' notes were withdrawn in 1977, while the 100 and 500 rupiah notes remained valid until 1988.

As of 1 September 1971, all notes of the '1960' Soekarno notes (which were fact the first notes of the 'rupiah baru' of 1965 were no longer valid tender.

1971-1973: reintroduction of coins to Indonesia

With the raging inflation of the 1960s very much under control at this point, coin issuing resumed after a 10 year hiatus, and coins were issued in January 1 1971, of denominations 1, 2 and 5 rupiah, all in aluminium. 10, 25, and 50 rupiah coins were added, in cupro-nickel, on 5th April 1971. The coins featured on the reverse 'Bank Indonesia' '1 rupiah' (etc.) '1970' (1, 2, and 5 rupiah) or '1971' (10, 25, 50 rupiah). The designs were: White-browed Fantail (1rp), rice and cotton stalk (2rp), Black Drongo bird (5rp), rice and cotton stalk with Indonesian wording "INCREASE THE PRODUCTION OF CLOTHING AND FOOD" (10rp), Victoria Crowned Pigeon (25rp), and bird of paradise (50rp). The final mintages of these coins was: 136 million (1 rupiah), 139 million (2 rupiah), 448 million (5 rupiah), 286 million (10 rupiah), 1.22 billion (25 rupiah) and 1 billion (50 rupiah).

At the time the exchange rate was 378 rupiah to the US$, so the smallest coin was worth approximately 1/4 of a US cent. A '1973' cupro-nickel 100 rupiah large coin showing a Minangkabau tribal house was issued on 2 January 1974, at which time the exchange rate was 415 rupiah to the dollar. A total of 913 million of these coins were minted, some of which are still found in circulation today.

New designs for the 5 (aluminium) and 10 rupiah (brass-clad steel) coins celebrated Indonesia's family-planning program, and were dated 1974, depicting the ideal of a 2-child family stating 'FAMILY PLANNING TOWARDS FAMILY WELFARE'; 448 and 223 million were minted.

As a result of the coinage issue, notes below 100 rupiah were eventually withdrawn in Indonesia permanently from September 1 1975 (the exchange rate was still fixed at 415 rupiah to the dollar at this point, but inflation had probably been about 100% since the exchange rate had been set).

New banknotes of the period 1976-1988

The 1,000, 5,000 and 10,000 rupiah notes were completely re-designed with the date 1975, and issued in mid-1976, as an anti-counterfeiting measure against fake notes of the Sudirman series. Unlike previous notes, there was no coherent theme to these (and indeed, never since in Indonesian money issues): the original intention was a full new 'Diponegoro' series, but in the end only the 1000 rupiah note featured this design - other denominations were designed but never issued. The old Sudirman notes of 1000 to 10000 rupiah were withdrawn as legal tender as of 1 September 1977. [8] The 100 rupiah was the next note to be redesigned, in pink, a colour that remained in all subsequent 100 rupiah notes. It was dated and issued in 1977 (October). The 500 rupiah note followed in April 1978 (dated 1977), thereby replacing the obsolescence of the 1968 series of notes. All these notes, plus the Sudirman 100 and 500rp, were declared no longer valid tender in April 1988, except for the 10,000rp which was declared invalid effective 2 January 1980.

Another new design for the 10,000 rupiah came dated and issued 1979. A new 1,000 rupiah, dated 1980, began circulating in that year, while 5,000 ('1980' date) and 500 rupiah ('1982' date) re-designs were circulated from 1982. These notes were all withdrawn as legal tender on May 1 1992.

New 100 ('1984' date) and 10,000 ('1985') rp notes were issued in 1985, with 5,000 ('1986') updated in 1986. The 1,000rp ('1987') followed in 1987, while a 500rp ('1988') was circulated from 1988.

Updated coinage: 1978-1979

The 1973 100 rupiah was given an updated reverse design in 1978, reading 'FOREST FOR WELFARE' '1978' and a forest motif. The coin was also made thinner, although its dimensions did not change

The 1974 5 rupiah, meanwhile, was updated '1979', issued from March 1980, retaining its family planning message, but adding an inner circle in the coin, and being shrunk in size, presumably to cut the cost of production. 413 million coins were minted dated 1978, while 5 million were later issued dated 1995 and 1996.

The 1974 10 rupiah was similarly updated to '1979'. 286 million were minted with this date.

Updated coinage: 1991-1993

No new coin designs were made in Indonesia until 1991. A 25 rupiah aluminium numteg was dated 1991 in aluminium, while aluminium-bronze coins 50rp (Komodo dragon), 100rp (buffalo racing), and, for the first time, a 500 rupiah coin (Jasmine) were issued. The 25 rupiah coin was minted in dates 1991-1996, the 50 and 100 rupiah in dates 1991-1998, and the 500 rupiah in dates 1991-1994.

1993 extended the coinage again, to 1000 rupiah, a bimetallic coin of copper-nickel and aluminium-bronze. This coin depicts the 'oil palm', and exists in dates 1993-2000.

1992 banknote redesigns and addition of 20,000 rupiah note

1992 saw a complete redesign of notes 100-10,000rp. In addition, a 20,000 rupiah note was added, with a US$ value of approximately $10 at the time. This was the first new denomination of the 'new rupiah' since the 10,000 rupiah had been issued in April 1970 (then about US$26). To a large extent although the designs changed, the colour, feel and size of the notes remained consistent with previous issues. From this issue forwards, Indonesian notes have carried in small text in addition to the date of authority (e.g., "Direksi 1992"), the year of printing. The notes of this series were imprinted 1992-2000 for 1000 and 5000 rupiah, 1992-1995 for the 20000, 1992-1996, plus 1999 and 2000 for the 100 rupiah, 1992-1998 for the 10,000 rupiah, and 1992-1999 for the 500 rupiah.

1993 Soeharto commemorative 50,000 rupiah

In 1993 a 50,000 rupiah (approx US$22) note celebrating "25 Years of Development" in polymer with hologram, limited to five million, and in a presentation pack explaining the 25-year growth plan since 1969 were printed, priced at double face value: 100,000 rupiah. The design featured Soeharto on the front and Soekarno-Hatta airport on the back, with a plane taking off to symbolise Indonesia's growth. However, it is believed that due to poor sales, that some of the polymer notes, minus the folder, were issued as regularly circulating money. A paper version of similar design was printed in 1993 and 1994.

1995 reissues: addition of security thread

1995 saw the introduction of the security thread to Indonesian banknotes, a feature on all notes of 'Direksi 1995' and newer. The 1992 20,000 rupiah, and 1993 50,000 notes were in 1995 re-authorised 'Direksi 1995' with the addition of a foil security strip. Both were imprinted 1995-1998.

Coin revisions 1997-1999

The 500 rupiah coin was updated '1997' with a smaller jasmine leaf and the same aluminium-bronze material. The coin was minted dated 1997-2003.

The 50 rupiah coin was updated '1999' in aluminium showing the Black-naped Oriole. This coin exists with mint dates up to present.

The 100 rupiah coin was updated '1999' in aluminium depicting the palm cockatoo.

1998-1999: post financial crisis banknotes

The Asian financial crisis of 1997-1998 reduced the rupiah's value by over 80% in a few months and was a major factor in the overthrow of President Suharto's government. The rupiah had traded at about 2000-3000 rupiah per 1 USD, but reached a low of 16,800 rupiah per dollar in June 1998. The currency, which had been relatively stable in prior years, had its value destroyed. The government did not take any action to demonetise or revalue the banknotes, "Direksi 1998" merely redesigned the 10,000 and 20,000 rupiah notes.

"Direksi 1999" saw a new Soepratman design for the 50,000 rupiah, replacing the commemorative note of Suharto, who had been deposed after more than 30 years as Indonesia's dictator in the wake of the crisis.

The banknote lineup was extended with a new denomination of 100,000 rupiah in 1999, by then worth about US$12.

500 million notes of the 100,000 rupiah polymer note were printed, to all be issued within a month of November 1999.[9] This was part of Indonesia's millennium bug preparations, lest there should be a great demand for cash after the new year. Polymer was chosen because, according to Bank Indonesia, plastic would be harder to counterfeit and would last longer. However, the notes were not popular in banks as counting machines were unable to count them accurately and there have been issues with the money sticking to one another due to the heat of the machine.

2000-2005: redesigns to all of Indonesia's denominations of banknotes

"Direksi 2000" brought a new 1,000 rupiah note, with the 100 and 500 rupiah notes having been discontinued due to the dramatic devaluation of Indonesia's currency.

"Direksi 2001" redesigned the 5,000 rupiah, while "Direksi 2004" brought an end to the polymer 100,000 rupiah notes, replacing with a paper design, as well the issue of a new more secure 20,000 rupiah note.

The most recent changes to Indonesian money were "Direksi 2005", which re-designed the 10,000 and 50,000 rupiah note.

Coin revisions of 2003

The last coin revisions in Indonesia are of 2003.

The 200 rupiah coin in aluminium, depicting the Bali Starling was introduced for the first time, while a third variation on the 'jasmine' theme of the 500 rupiah coin saw an aluminium coin introduced.

Pre-1997 notes are no longer legal tender, due to the lack of security features and association with the Suharto regime, but can be exchanged in Bank Indonesia offices until 2010. Due to the low value of the notes below 1000 rupiah, some remain in circulation in increasingly poor condition, as low denomination 'uang pasar', outside the banking system for use in informal transactions.

The 10,000 rupiah notes and above all exist in two legal tender designs. However, the 2004 and 2005 series are gradually replacing the 1998 and 1999 series.

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 has however announced a change to this, with a new 2000 rupiah note to be issued in Q2 2008, and the 1000 rupiah note withdrawn, to be replaced with a coin.[10] The measure is intended to cut the cost of issuing money. Hence denominations up to 1000 (~$0.10) would be handled in coin, and from 2000 (~$0.20) and up in notes.

Coins

From 1991, a new coinage was introduced consisting of 25, 50, 100, 500 and 1000 rupiah coins. 200 rupiah pieces were introduced in 2003.

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 receive sweets in lieu of the last few rupiah of change in supermarkets and stores[citation needed].

Indonesian rupiah coins [11]
Value Series Diameter Thickness Weight Material Obverse Reverse Availability
Rp 1 1970 22 mm 1.4 mm 1.42 g Aluminium Sikatan Bird Nominal "1" None (Worth ~$0.0001)
Rp 25 1991 18 mm 1.98 mm 1.22 g Garuda Pancasila Nutmeg Fruit and nominal "25" Low
Rp 50 1999 20 mm 2 mm 1.36 g Nominal "50" and Kepodang Bird High
Rp 100 1999 23 mm 2 mm 1.79 g Nominal "100" and Palm Cockatoo Bird
Rp 200 2003 25 mm 2.3 mm 2.38 g Nominal "200" and Bali Starling Bird
Rp 500 1991 24 mm 1.8 mm 5.29 g Aluminium Bronze Nominal "500" and Jasmine Flower Low
1997 1.83 mm 5.34 g Medium
2003 27 mm 2.5 mm 3.1 g Aluminium High
Rp 1,000 1993 26 mm 2 mm 8.6 g Bi-metal, Nickel and Aluminium Bronze Palm Tree and nominal "1000" Low

Banknotes

Legal tender Indonesian rupiah banknotes [12]
Value Series Size Dominant color Obverse Reverse Watermark Value's First Year Availability
Rp 1,000 2000 141 × 65 mm² Blue and green Captain Pattimura Mutiara and Tidore Islands Tjut Njak Meutia 1968 High
Rp 5,000 2001 143 × 65 mm² Green and brown Tuanku Imam Bonjol Weaving craft woman Tjut Njak Meutia 1968
Rp 10,000 1998 148 × 72 mm² Brown and violet Tjut Njak Dhien Segara Anak Lake Wage Rudolf Soepratman 1964 Medium
2005 145 × 65 mm² Violet Sultan Mahmud Badaruddin II The traditional Limas House of South Sumatra Sultan Mahmud Badaruddin II High
Rp 20,000 1998 152 × 72 mm² Green Ki Hadjar Dewantara Studying student in class Ki Hadjar Dewantara 1992 Medium
2004 147 × 65 mm² Green Otto Iskandar Di Nata Tea plantation Otto Iskandar Di Nata High
Rp 50,000 1999 152 × 72 mm² Violet, yellow and green Wage Rudolf Soepratman Displaying/rising a flag H.O.S. Cokroaminoto 1993 Medium
2005 149 × 65 mm² Blue I Gusti Ngurah Rai Beratan Lake in Bali I Gusti Ngurah Rai High
Rp 100,000 1999 151 × 65 mm² Yellow, pink, brown, red and green Sukarno and Mohammad Hatta Parliament building in Jakarta Garuda Pancasila and the logo of Bank Indonesia 1999 Medium
2004 Red Wage Rudolf Soepratman High

Security features

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 believe 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.

Exchange Rate and inflation

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

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

1949-1965 foreign exchange restrictions

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.[13] 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 4th 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 4th 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 66 2/3%. 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).[14]

1966-1971 stabilization and growth

The last demonetization of rupiah notes occured 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

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.[15]

Despite the fixed rate, the failure of the rice crop in 1972, exarcebated 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.[16]

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

Managed Float period 1978-1997

1978-1986 devaluations

By 1978, the combination of a fall in oil prices and an increase in foreign reserves meant that the rupiah was devalued 33% to 625rp to 1 US$ on 16th November 1978 (although prices had in fact increased nearly four fold 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 [[17]] against major world currencies was just over twice as high as that of 1995 (prior to the free fall of the rupiah). This rupiah was appreciated in real terms (due to inflation) slightly over 1979, remaining fairly steady until March 1983, by which point the exchange rate had fallen only 11% in the three and a half years since the ending of the fixed rate, at 702rp.

The overvaluation of the rupiah (which had existed for a number of years) 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 30th 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% offical 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

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 [18], despite an official 7-basket currency, 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 delta of Indonesian inflation above US inflation; hence, by June 1997 the rupiah had fallen to 2350rp.

Asian Financial Crisis (and response) 1997-1999

First stage of the crisis - limited initial falls

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 (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, and despite Bank Indonesia's attempts to intervene, it soon abandoned the managed float, leaving the rupiah to float freely on August 14th 1997.

The rate, 2436 on July 11th, was 2663 on August 14th, and 2955 on August 15th: 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

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 24th 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 ther obligation. By October 4th, 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 8th 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 1st 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 speical 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.[19]

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 15th 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 January 12th to 7225 on the 15th of 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 23rd. 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 26th January,[20] ensuring that the government would guarantee all existing deposits. The Indonesian Bank Restructuring Agency was setup 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 suspendng the owners. 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 of Central Asia, Indonesia's largest private bank that ensued, causing the bank to be taken over by IBRA on 29th of 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 21st May 1998. Little action was seen immediately, and by 17th 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

In 2000, the rupiah fell to around 9000, and in 2000-2008 has tended to trade in the 9000-1000rp to 1 US$ region. Unlike many Western currencies, it did not gain in strength against the US$ in the period 2006-2008, hence it depreciated against non-US currencies over this time.

The catastrophic damage to the rupiah caused in 1997-1998 severely damaged confidence in the currency, even though it is freely convertible currency, it is still regarded as a risky currency to hold. Within Indonesia, the preferred currency for exchange is the US dollar. Other currencies are typically subject to a wide exchange spread. As of May 2008, 1US$ is worth approximately 9200 Indonesian rupiah.

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

Commemorative coins

Although circulating coins in Indonesia have never been made from precious metals, a number of special issues have been made since coins were reintroduced to Indonesia in 1970 from either silver or gold. As commemorative coins, they were all sold above their intrinsic value, and also above their nominal value.

All the coins struck are proof coinage, with the exception of the 0.5 silver 1974 WWF series, and some of the 1974 WWF gold komodo dragon coins.

The following issues have been made:

Indonesian Commemorative coins
Issued Reason for Issue Material Nominal Value Diameter Thickness Purity Weight Obverse Reverse Mintage limits Notes Approximate metal value as of March 2008
1970 25 years of Independence Silver Rp 200 0.999 8g "1945 -1970" "200 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Greater Bird of Paradise 5100 $5
Rp 250 10g "1945 -1970" "200 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Statue of Manjusri from Tumpang Temple, Malang 5,000 $6
Rp 500 20g "1945 -1970" "500 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Female Wayang Dancer 4,800 $12
Rp 750 30g "1945 -1970" "750 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Balinese Eagle Carving 4,950 $18
Rp 1,000 40g "1945 -1970" "1000 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Sudirman 4,250 $24
Gold Rp 2,000 18mm 0.900 4.93g "1945 -1970" "2000 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Greater Bird of Paradise 2,970 Year coins re-started in Indonesia $136
Rp 5,000 30mm 12.34g "1945 -1970" "5000 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Statue of Manjusri from Tumpang Temple, Malang 2,150 $341
Rp 10,000 40mm 24.68g "1945 -1970" "10000 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Female Wayang Dancer 1,440 $681
Rp 20,000 50mm 49.37g "1945 -1970" "20000 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Balinese Eagle Carving 1,285 $1,363
Rp 25,000 54mm 61.71g "1945 -1970" "25000 RUPIAH" "1970" Garuda Pancasila "REPUBLIK INDONESIA" "25 TAHUN KEMERDEKAAN" Sudirman 970 $1,703
1974 WWF endangered animals awareness Silver Rp 2,000 38.61mm 2.75mm 0.925 28.28g "BANK INDONESIA" "1974" Garuda Pancasila Javan Tiger "Rp 2000" 18,0000 proof Coins minted by Royal Mint. Similar coins issued in 11 other countries $14
0.500 25.65g 43,000 $7
Rp 5,000 42mm 2.87mm 0.925 35.00g Orangutan "Rp 5000" 17,000 proof $19
0.500 32.00g 43,000 $9
Gold Rp 100,000 34mm 2.49mm 0.900 33.437g Komodo Dragon "Rp 100000" 5,333 plus 1,369 proof $923
1987 WWF 25 years Silver Rp 10,000 36mm 0.925 19.44g "BANK INDONESIA" "1987" Garuda Pancasila Babirusa "Rp 10000" 25,000 Minted by Royal Mint. Similar coins issued in 16 other countries $11
Gold Rp 200,000 25mm 0.917 10g Javan Rhinoceros "Rp 200000" 5,000 $281
1990 70 Years of Save The Children Silver Rp 10,000 36mm 0.925 19.44g "BANK INDONESIA" "1990" Garuda Pancasila "SAVE THE CHILDREN" "10000 RUPIAH" 2 Children playing badminton 20,000 Similar coins in 22 other countries $11
Gold Rp 200,000 25mm 0.917 10g "SAVE THE CHILDREN" "200000 RUPIAH" Balinese Dancer 3,000 Similar coins in 12 other countries $281
1990 45 Years of The Republic Gold Rp 125,000 0.9583 8g Garuda Pancasila "1990" "BANK INDONESIA Museum Joang 45 (Museum of Struggle) "125000 RUPIAH" 16,000 $235
Rp 250,000 17g "NUSANTARA" "1945-1990" "250000 RUPIAH" Map of Indonesia 16,000 $500
Rp 750,000 45g Garuda Pancasila with text "ANGKATAN 45" and wreath of rice and cotton. "750000 RUPIAH" 16,000 $1,323
1995 50 years of The Republic Gold Rp 300,000 25mm 1.85mm 17g "BANK INDONESIA" "1995" "300000 RUPIAH" Garuda Pancasila "50 TAHUN R.I." Soeharto speaking to the people 3,000 sets $500
Rp 850,000 35mm 2.78mm 50g "BANK INDONESIA" "1995" "850000 RUPIAH" Garuda Pancasila "LIMA PULUH TAHUN KEMERDEKAAN REPUBLIK INDONESIA" Soeharto $1,470
1999 50 Years of UNICEF Silver Rp 10,000 38.61mm 0.925 28.28g "BANK INDONESIA" "1999" Garuda Pancasila "FOR THE CHILDREN OF THE WORLD" "Rp 10000" Boy and Girl Scout planting one of a million trees 25,000 Similar coins issued in other countries $16
Gold Rp 150,000 22mm 0.9999 6.22g "FOR THE CHILDREN OF THE WORLD" "Rp 150000" Boy on kuda lumping (Javanese bamboo horse for dancing) 10,000 Similar coins issued in other countries $191
2001 100 years since birth of 'Bung Soekarno' Silver Rp 25,000 38.61mm 0.925 28.28g "BANK INDONESIA" "2001" Garuda Pancasila "100 TAHUN BUNG KARNO (1901-2001)" "Rp 25000" Sukarno in profile 500 $16
Gold Rp 500,000 28.2mm 0.9999 15g "100 TAHUN BUNG KARNO (1901-2001)" "Rp 500000" Sukarno facing 500 $460
2002 100 years since birth of 'Bung Hatta' Silver Rp 25,000 38.61mm 0.925 28.28g "BANK INDONESIA" "2002" Garuda Pancasila "SATUABAD BUNG HATTA (1902-2002)" "Rp 25000" Hatta looking left 2,000 $16
Gold Rp 500,000 28.2mm 0.9999 15g "SATUABAD BUNG HATTA (1902-2002)" "Rp 500000" Hatta looking right 2,000 $460

See also

References

  1. ^ erols.com
  2. ^ McDonald, Hamish (1980). Suharto's Indonesia. Victoria, Australia: Fontana Books. pp. page 55. ISBN ISBN 0-00-635721-0. {{cite book}}: |pages= has extra text (help); Check |isbn= value: invalid character (help)
  3. ^ Far Eastern Economic Review, 13 February 1965 (cited in McDonald, Hamish (1980). Suharto's Indonesia. Victoria, Australia: Fontana Books. pp. page 55. ISBN ISBN 0-00-635721-0. {{cite book}}: |pages= has extra text (help); Check |isbn= value: invalid character (help) )

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