Current Rupiah Exchange Rate is Undervalued: BI

RRI.CO.ID, Jakarta - Bank Indonesia (BI) assessed that the current rupiah exchange rate does not yet reflect Indonesia’s economic strength. The central bank considers the currency undervalued, despite its controlled inflation target of 2.5±1 percent for 2026 and 2027.

BI Governor Perry Warjiyo said the central bank is committed to maintaining rupiah stability through various market instruments. “Both through intervention in the offshore Non-Deliverable Forward (NDF) market and spot transactions and Domestic Non-Deliverable Forward (DNDF) in the local market,” Perry said during an online press conference following the Board of Governors’ Meeting (RDG) in Jakarta on Thursday, February 19, 2026, as quoted by Antara.

He emphasized that BI will continue to strengthen stabilization policies to mitigate the negative impact of global financial market uncertainty. Perry projected that the rupiah would remain stable and potentially strengthen, supported by attractive yields, low inflation, and improving economic growth prospects.

On February 18, 2026, the rupiah was recorded at IDR 16,880 per USD, a 0.56 percent decline from the end of January 2026. BI noted that the pressure was triggered by high global uncertainty and increased demand for foreign exchange from domestic corporations.

Externally, BI expects Indonesia’s Balance of Payments (BOP) to remain solid. In the fourth quarter of 2025, the December trade surplus reached USD 2.5 billion, mainly supported by natural resource-based exports.

This kept the 2025 current account deficit in the range of 0.5 percent of GDP to a 0.3 percent surplus. For the first quarter of 2026, the trade surplus is projected to continue in line with stronger non-oil and gas exports.

Foreign portfolio investment flows until February 13, 2026, recorded net inflows of USD 1.6 billion, mainly into Bank Indonesia Rupiah Securities (SRBI) and Government Securities (SBN), despite stock market outflows.

Foreign exchange reserves at the end of January 2026 remained high at USD 154.6 billion, equivalent to 6.3 months of imports or 6.1 months of imports and government external debt payments, well above the international adequacy standard of around three months of imports.

“Going forward, the 2026 Balance of Payments is expected to remain stable, supported by a current account deficit that stays healthy in the range of 0.9 percent to 0.1 percent of GDP,” Perry said. ***