Indonesia says economic pressures remain manageable despite rupiah slump

Indonesia’s economy faces external and domestic pressures, but Deputy Finance Minister Juda Agung assured Thursday that the situation remains manageable. The rupiah hit a record low of over 18,000 per dollar on June 10 before recovering after the central bank’s surprise 25-basis-point rate hike, following a 50-point increase last month. Another rate rise is expected next week. Juda told AFP the currency was undervalued and inflation—currently at 3.0%—stays within the central bank’s target range of 2.5% ± 1.0%. An eight percent rupiah depreciation this year adds about 800 billion rupiah to the budget deficit, but he called the impact manageable. The government insists on maintaining its 8.0% GDP growth target by 2029, despite economic slowdowns and rising oil import costs due to Middle East conflicts. First-quarter 2026 growth was 5.6%, though economists question its accuracy. Indonesia’s trade surplus collapsed to $89 million in April from $3.3 billion in March, primarily due to expensive oil imports. Juda dismissed concerns over tightened export controls, stating they aim to curb graft losses estimated at $900 billion over 20 years. He also defended recent parliamentary oversight of the central bank, insisting its independence remains intact. The rupiah is among Asia’s worst-performing currencies this year, and Indonesia’s stock market has dropped over 30% since January. The government continues fuel subsidies and trimmed school meal programs amid budget constraints.