The Indonesian rupiah

Who plans and destroys the rupiah

Bank Indonesia runs the whole life of the currency. It decides how much money Indonesia needs and in which denominations, then issues it, circulates it, withdraws it and destroys it. Perum Peruri, the state-owned security printer, holds the authority to produce it.

The law requires the rupiah for cash and non-cash payments made in Indonesia, and businesses must price their goods in it. The exceptions are specific. Certain state budget transactions are among them, and so is international trade and financing. A valid rupiah may not be refused unless its authenticity is in doubt or the parties agreed in writing to settle in a foreign currency. Across the border in Timor-Leste the rupiah circulates informally beside the US dollar, which is that country's official money.

How the republic built one currency

The Bank of Java issued Netherlands Indies guilders before the Japanese occupation, and the Japanese military government then issued its own gulden and rupiah notes. Both kinds stayed in circulation after independence was declared. The republic's ORI entered circulation on 30 October 1946, and because the revolution cut communications the government authorised regional issues, called ORIDA, from 1947.

In May 1950 the federal government withdrew both in favour of the currency of the United States of Indonesia. That money lost its validity in August, when the country returned to a unitary state. Bank Indonesia issued its own notes from 1953. Two regional rupiahs followed in October 1963: one in the Riau Islands, replacing the Malayan dollar, and one in West Irian, replacing the guilder. Riau's was withdrawn on 1 July 1964.

On 13 December 1965 the government struck three zeros off the currency, one new rupiah for 1,000 old. A law of 1968 made Bank Indonesia the sole issuer of notes and coins. In 1971 the national rupiah reached West Irian and the regional one began to be withdrawn, which completed the union of the currency. The rupiah has floated since August 1997.

Why several designs of one note stay valid

A new issue does not cancel an old one. Bank Indonesia's catalogue lists notes from the 2022, 2016, 2014 and 2011 issues together, and a note stops being legal tender only when the bank formally revokes that particular issue and announces an exchange period. The 2022 series has seven notes, from Rp1,000 to Rp100,000, with national heroes on the front. The backs show traditional dances beside scenery and plants.

The coins work the same way. A series of Rp100, Rp200, Rp500 and Rp1,000, each with a national hero, entered circulation on 19 December 2016. The Rp1 coin of 1970 and the Rp50 coin of 1999 are still legal tender. On 1 December 2023 the bank withdrew three older coins: the Rp500 of 1991, the Rp1,000 of 1993 and the Rp500 of 1997.

To check a note, the bank asks people to use the 3D method, dilihat, diraba, diterawang: look at it, feel the raised printing and the tactile lines, and hold it to the light for the watermark.

Whether the zeros will come off again

The government raised a plan in 2013 to drop three zeros from the rupiah without changing what it buys. Parliament postponed it the next year, and a later bill was left out of the 2015 to 2019 legislative programme. A government bill based on Bank Indonesia's recommendation now sits in the programme for 2025 to 2029, and the Ministry of Finance expected it to be finalised by 2027. The bank says redenomination would simplify transactions but would need stable conditions first. Nothing has been carried out yet. The economist Syafruddin Karimi has questioned whether changing nominal values brings wider benefits and warned that old and new money circulating together could invite confusion and fraud.

Separately, Bank Indonesia published a white paper on a digital rupiah, Project Garuda, on 30 November 2022, and completed a first proof of concept in 2024.