What is the Indonesian Rupiah (IDR)?
The Indonesian rupiah (IDR) is the official currency of Indonesia, a Southeast Asian country made up of thousands of small islands.
Indonesia was a Dutch colony until 1942 when it was invaded by Japan during World War II. After the war, Indonesia gained independence in 1945. The rupiah was introduced a year later, in 1946.
Key points to remember
- The Indonesian rupiah uses the currency code IDR and is the official currency of the nation of Indonesia.
- The IDR first became available in 1946 while other currencies were also in circulation and in 1950 became the official currency of Indonesia when the Dutch officially recognized its independence.
- The IDR has seen a steady decline in its value against the dollar due to periods of high inflation.
Understanding the Indonesian Rupiah (IDR)
The IDR is made up of 100 meaning, and is often shown with the symbol or abbreviation Rp. The rupiah is controlled by the Bank of Indonesia. The rupee is also informally called the advantage by the locals, which is Indonesian for the money.
The rupiah is administered by the Bank of Indonesia. Banknotes appear in denominations of 1,000; 2,000; 5,000; 10,000; 50,000; and IDR 100,000. Coins are minted in denominations of 50; 100; 200; 500; and IDR 1,000.
History of the Rupee
The Indonesian rupiah was first seen in October 1946, but was only one of many currencies in circulation. Others included Dutch East Indies gulden, a Japanese version of gulden, and others. Between 1950 and 1951, other currencies fell and the IDR became the official currency of Indonesia after independence from the Netherlands, but the Netherlands still controlled Bank Indonesia until 1953.
In 1959, the official rate was set at IDR 45 to 1 USD. Following this, inflation ran rampant in the 1960s, with effective rates for the IDR reaching nearly US$5,000 in 1965, although the official rate remained the same.
In 1965, new rupee notes were introduced, replacing the old 1,000 old IDR with a new IDR. The exchange rate was fixed at 0.25 rupees per USD. Stabilization efforts began again under Suharto’s leadership, and by 1970 inflation had fallen and exports had risen. A more realistic exchange was set at 378/USD, but then changed in 1971 to 415/USD. This rate remained in effect until 1978, when it was again devalued to 625/USD. In 1978, the country switched to a managed float instead of a fixed exchange rate system. The currency continued to fall.
Due to the Asian financial crisis, Indonesia abandoned the managed float and the currency became floating. In the years that followed, the Indonesian rupiah continued to lose ground, and in July 2022 the exchange was around IDR 15,000 to 1 USD.
IDR Currency Conversions
When looking for a currency quote, the rate will usually be quoted in USD/IDR. The corresponding rate, such as 14,234, means that it costs IDR 14,234 to buy one USD.
Suppose a traveler is monitoring exchange rates for an upcoming trip. In June 2018 they would have seen that the rate was around 14,000, but in October 2018 the rate had risen to 15,400. This means that the IDR has lost value, because it costs more IDR to buy a USD. Alternatively, it could be seen as an increase in the value of the USD against the IDR.
At the beginning of 2019, the rate had fallen back to near 14,000. This means that the value of the USD has fallen against the IDR (or that the IDR has risen against the USD) since it costs less IDR to buy one USD than it did a few months ago.
To find out how much an IDR is worth in USD, divide it by the exchange rate. For example, if the rate is 14,200, divide one by 14,200 to get 0.00007. This is the IDR/USD exchange rate, which means it costs $0.00007 for each Indonesian rupiah.
What is Indonesia’s GDP?
Indonesia has a mixed economy in which the private sector and the government play an important role. The country is Southeast Asia’s largest economy with a 2021 GDP of $1.2 trillion.
Is Indonesia experiencing high inflation?
Indonesia has always struggled with periods of high inflation. In recent years, this has moderated. Its inflation rate in 2021 was only 1.6%, but hit a 7-year high in the summer of 2022.
Is Indonesia a democracy?
Since the entry into force of political reforms in 1999, Indonesia has become a democratic republic with a wide range of individual freedoms.