Executive Summary

Key insights and market outlook

The Indonesian government is moving forward with plans to redenominate the rupiah, potentially simplifying Rp1,000 to Rp1. The process, expected to be completed by 2026, includes a three-year transition period, possibly making the new currency effective by 2029 ³

. Bank Indonesia (BI) will lead the implementation, focusing on maintaining currency stability and economic growth during this period.

Full Analysis

02

Deep Dive Analysis

Indonesia Advances Rupiah Redenomination Plan: Challenges and Opportunities

Simplification Process and Timeline

The Indonesian government has included the rupiah redenomination bill in the 2025-2029 Strategic Plan, with the drafting process expected to be completed by 2026 ³

. The redenomination process involves simplifying the currency by removing three zeros - for example, changing Rp1,000 to Rp1. This process is expected to take place over a three-year transition period, potentially making the new currency effective by 2029 ³.

Economic Rationale and Historical Context

The redenomination aims to enhance economic efficiency and strengthen the rupiah's credibility. Similar currency simplifications have been implemented in various countries, with mixed results. Successful examples include Brazil's Plano Real in 1994 and Turkey's currency reform in the early 2000s ⁴

.

Challenges and Implementation

Bank Indonesia Governor Perry Warjiyo emphasized that redenomination is not a priority at the moment, as it requires extensive preparation and the right economic conditions ⁵

. The central bank is currently focusing on maintaining currency stability and supporting economic growth. The implementation will require coordination between BI, the government, and parliament, as well as comprehensive public education to prevent potential inflationary pressures from price rounding ³.

References