The United States Dollar (USD) and the Indonesian Rupiah (IDR) have a long history of both similarities and differences. Both currencies were introduced to the world in the mid 1960’s within a year of each other. The USD was launched in 1964, while the IDR was launched in 1965. Both currencies were also set at an exchange rate where 1 USD equaled 2.78 IDR.
History of Indonesian Rupiah
The Indonesian rupiah (Rp) is the country’s official currency. Indonesia’s money is authorized and issued by Bank Indonesia, the Republic’s central bank. Indonesians sometimes use the term “peak” to refer to the rupiah, which translates as “silver.” The Sanskrit term “rupyaka,” which also means “silver,” gave rise to the word “rupiah.”
In the foreign exchange trading market (forex), the rupiah is known as IDR. It implies that, for example, the US dollar and Indonesian rupiah would have a relevant exchange rate such as USD/IDR. As of late 2020, the current USD/IDR exchange rate is 14,167.80 or roughly Rp14,167 per US dollar.
The Dutch Indies gulden was used in Indonesia’s colonial era. During the Second World War, Japanese occupiers produced a variant of the gulden. In October 1946, Indonesia first issued the rupiah, which circulated alongside several other currencies from 1946 to 1950.
Pra Independence Era
The Japanese version of the gulden was the most popular currency, followed by the Netherland’s gulden and Indonesia’s brand-new rupiah. The problem ended when Indonesia was granted independence in 1950, although both Japan and the Netherlands continued to keep their national currencies.
The federal government of Indonesia implemented currency reform the following year, opting for the rupiah as the national money.
Throughout its history, the rupiah has been plagued by significant levels of inflation. In 1965, the rate of inflation increased to 635 percent. In 1966, political changes prompted the adoption of a stabilization plan that altered currency policy, allowing for debt forgiveness and more stringent bank reserves while removing restrictions on imports.
In an attempt to battle the increasing inflation, Indonesia’s authorities implemented a series of policies, including attempting to regulate foreign exchange (the rate was typically extremely disadvantageous to the rupiah).
In order to increase the reserves that the Indonesian government needed, the central bank implemented significant controls on foreign exchange rates. Several Indonesian companies were harmed as a result of a lack of sufficient imported materials available.
The introduction of a “new” rupiah in 1966, which was set at a rate of 1 new rupiah = 1000 old rupiahs, was one of the economic changes.
The rupiah was pegged according to a “managed float” mechanism, which linked the currency to a basket of currencies. Despite the government’s intervention, the rupiah continued to weaken through the 1990s.
Asian Financial Crisis
The rupiah and Indonesia were both negatively affected by the 1997 Asian Financial Crisis, which afflicted nearly all countries in the region. Despite this, Indonesia was more well-equipped to weather the storm than neighboring nations, having significantly enhanced its foreign reserves position.
Finally, with the help of the International Monetary Fund (IMF), Indonesia was able to stabilize the rupiah. The rupiah fell as low as Rp16,800 = 1 USD before recovering to a level near Rp10,000 = 1USD. The rupiah, on the other hand, continues to be regarded as a highly hazardous assets to own, and the current exchange rate of 14,000 rupiahs is still a bit greater than its historical average.
IDR Coins and Banknotes
The current circulating coin in Indonesia is the old series, which began circulation in 1991 and concluded in 2010. A new series was introduced in 2016, it is made up of two parts. Rupiah coins are made of bronze, nickel, or aluminum and come in five denominations of 50, 100, 200, 500, and 1000 rupiah. National heroes have been chosen as the focal point of the new series of coins.
Indonesian banknotes come in denominations of IDR1000, IDR2000, IDR5000, IDR10000, IDR20000, IDR50000, IDR100000 and special 75th independece day commemorative note. Indonesian banknotes printed before the turn of the century are no longer legal tender in the country, primarily because they do not have adequate security elements and to a lesser degree owing to their ties with the Suharto regime.
Indonesia unveiled an Rp75,000 commemorative banknote in August 2020 to commemorate the country’s 75th anniversary of independence. Despite producing a huge print run of 75 million of the commemorative notes, demand for them was so high that Bank Indonesia had to put purchase restrictions in place.
Where can I Buy and Exchange Currency?
You can change foreign money at banks and currency dealers in the main cities of the archipelago. The majority of tourists’ resorts have a money changer; however, if you are visiting remote locations, it is better to exchange your cash beforehand. If you want to buy a large quantity of foreign currency and don’t have a foreign currency account at your bank, it’s best to place the order the day before. In smaller branches, local banks may only store a limited amount of foreign currency.