Currency Swaps Support Rupiah but Not Long-Term Fix: Expert

RRI.CO.ID, Jakarta - The rupiah exchange rate remains under pressure from global economic dynamics.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, said the government and Bank Indonesia (BI) have expanded currency swap agreements with China, Japan, South Korea, and several other countries to safeguard financial market stability.

Executive Director of the Institute for Development of Economics and Finance (INDEF), Esther Sri Astuti, assessed that the swap scheme could provide short-term support for the rupiah. “Currency swaps have a positive impact, but this is not a long-term solution,” she said in Jakarta on Thursday, May 7, 2026, as quoted by Antara.

Esther explained that swap cooperation helps ease pressure on the weakening rupiah while strengthening Indonesia’s foreign exchange reserves. Non-dollar financing schemes are also considered effective in supporting international transactions and foreign debt payments.

“Enhanced liquidity strengthens reserves and ensures the availability of funds for transaction needs or debt payments,” she said.

She added that financing diversification is crucial to reduce Indonesia’s reliance on the US dollar. The use of local currencies in cross-border transactions can also help businesses mitigate risks from exchange rate and interest rate fluctuations.

BI data shows that Indonesia’s foreign exchange reserves stood at USD 148.4 billion at the end of March 2026. Meanwhile, the rupiah closed stronger at IDR 17,387 per USD on Wednesday, May 6, up from IDR 17,424 per USD the previous day.

Nevertheless, Esther cautioned that swaps are only a temporary stabilization tool. “They are not the primary remedy for strengthening domestic economic fundamentals,” she said.

She emphasized that liquidity enhancement and financing diversification remain necessary to reduce dependence on the US dollar. “BI must also conduct market operations to stabilize the exchange rate, supported by sufficient US dollar reserves,” she added.

BI Governor Perry Warjiyo confirmed that BI is preparing several measures to strengthen and stabilize the rupiah, including interventions in the foreign exchange market and boosting capital inflows, supported by reserves deemed more than adequate. ***