20 Juta Rupiah To Myr

[Margorie Gomoran]

Therupiah was introduced in 1946 by Indonesian nationalists fighting for independence. It replaced the Japanese-issued version of the Netherlands Indies gulden which had been introduced during the Japanese occupation in World War II. In its early years, the rupiah was used in conjunction with other currencies, including a new version of the gulden introduced by the Dutch. The Riau Islands and the Indonesian half of New Guinea (Irian Barat) had their own variants of the rupiah in the past, but these were subsumed into the national rupiah in 1964 and 1971, respectively (see Riau rupiah and West Irian rupiah).

A long-running proposal to redenominate the rupiah has yet to receive formal legislative consideration. Since 2010, Bank Indonesia, as the monetary authority of Indonesia, has repeatedly urged the elimination of the final three zeroes of the currency to facilitate transaction handling, saying the move would not affect its value. In 2015, the government submitted a rupiah redenomination bill to the House of Representatives, but it has not yet been deliberated. In 2017, Bank Indonesia Governor Agus Martowardojo reiterated the call, saying that if redenomination started immediately, the process could be complete by 2024 or 2025.[5]

Presently, two series of coins are circulating: aluminum, and nickel coins dated between 1999, 2003, and 2010, and a new series of coins featuring Indonesia's national heroes were issued in 2016. These come in denominations of Rp100, Rp200, Rp500, and Rp1,000. Coins in circulation are mostly Rp500 and Rp1,000, whereas the smaller-denominated coins (Rp100 and Rp200) are rarely used, except in shops whose pricing requires them.[6]

As the smallest current note is worth approximately US$0.067, even small transactions such as bus fares are typically conducted with notes and the Rp1,000 coin is far more common than the Rp1,000 note. The government initially announced that this would change, with a Rp2,000 note to replace the Rp1,000, with that denomination fully replaced by the equivalent coin.[12] After a long delay, this proposal was revised so that the Rp2,000 banknotes were launched by Bank Indonesia (BI) on 9 July 2009, with the banknotes circulating as legal tender from 10 July 2009,[13] but without withdrawing the 1,000-rupiah note.

On 17 August 2020, Bank Indonesia officially introduced a Rp75,000 banknote to commemorate the 75th Independence Day of Indonesia. The note featured the proclamators of Indonesia's Independence, Sukarno and Mohammad Hatta (who were also featured in the Rp100,000 note).[17] In 2022, the BI predicts that banknotes of this series will cease to be legal tender in 2025 or 2026, with all circulating 2016-series banknotes replaced by newer 2022-series banknotes.[18][19]

Bank Indonesia introduced a new family of banknotes on 18 August 2022. Officially they were retroactively issued as legal tender on 17 August 2022 to commemorate the 77th Independence Day of Indonesia. Similar to the 2016 series, the Indonesian dances and national heroes are still featured on the notes, with some notable changes.[20][21]

Bank Indonesia initiated the Garuda Project, a project to develop Indonesia's central bank digital currency on 30 November 2022 crypto.[28] through a white paper on its development.[29] By passage of the omnibus law, the digital rupiah is legalised as a form of the rupiah.[30]

Historically, currencies of Indonesia have been influenced by the spread of Indian and Chinese cultures. During colonial times, the currency used in what is now Indonesia was the Netherlands Indies gulden.[31] The country was invaded in 1942 by Japan, which began printing its own version of the gulden, which remained in use until March 1946.[32][33] The Netherlands authorities and the Indonesian nationalists, who were fighting for independence, both introduced rival currencies in 1946 with the Dutch printing a new gulden, and the Indonesians issuing the first version of the rupiah on 3 October 1946.[34][33] Between 1946 and 1950 a large number of currencies circulated in Indonesia, with the Japanese gulden still remaining prevalent alongside the two new currencies and various local variants.[33] This situation ended when the federal government, now in complete control following the Dutch recognition of its independence, initiated currency reforms between 1950 and 1951.[33] The rupiah was declared the sole legal currency, with other currencies being exchanged for rupiah at rates which were often unfavourable to the holders.[33]

The rupiah has been subject to high inflation for most of its existence (which as an internationally recognised currency should be dated to 1950). Various attempts have been made to maintain the value of the currency, but all were abandoned.

The exchange rate determined upon the international recognition of Indonesia's independence in 1949 was Rp3.8 to US$1. Lembaga Alat-Alat Pembayaran Luar Negeri Publication No. 26 on 11 March 1950 (effective 13 March 1950) established the Foreign Exchange Certificate System (FECS).[35] By the trade-in certificates an export rate of Rp7.6 and an import rate of Rp11.4 was established.

The FECS was scrapped on 4 January 1952, by which time the government had been able to reduce its deficit by 5.3 billion rupiah through the exchange differential. The system was scrapped because domestic prices were being determined by the import rate, which were hurting profits from exports earned at the lower rate. Hence, the effective Rp7.6/11.4 exchange rate reverted to Rp3.8.

To control foreign exchange, the government brought in a number of measures. About 40% of the foreign-exchange requirements of importers were required to be paid to the government from April 1952, while as from September 1952, the government decided to provide only a limited amount of foreign exchange, made available every four months. These foreign-exchange restrictions, designed to provide the government with much-needed reserves, meant that some companies were operating at as low as 20% of capacity, due to lack of needed imported materials.

An increasingly complex set of tariffs on imports was unified in September 1955 with a set of extra import duties, requiring down payments to the government of 50, 100, 200, or 400% of the value of the goods.

The official Rp11.4 rate, which massively overvalued the rupiah, was a major incentive to black-market traders, and also contributed to anti-Java feeling, given that those producing raw materials on the large material-rich outer islands were not receiving fair value from their goods due to the exchange rate, diverting funds to the government in Java. The black-market rate at the end of 1956 was Rp31 to US$1, falling to Rp49 at the end of 1957, and Rp90 by the end of 1958.

In response to Sumatra and Sulawesi refusing to hand over their foreign exchange, in June 1957, a new system for foreign exchange was introduced; exporters received export certificates (BE) representing the foreign currency earned and could sell them to importers on the free market (but subject to a 20% tax). This effectively created a freely floating rupiah. The price of the certificates quickly reached 332% of face value by April 1958, i.e. Rp38, a rate at which the government chose to end the free market, fixing the price at 332% of face value.

The currency devaluation of large notes in 1959 had the official exchange rate devalued to Rp45 as of August 1959. Despite this, the fundamental issues with the fixed-exchange-rate system and severe import controls (which had cotton mills running at only 11% of capacity due to lack of imported raw materials) were not addressed, and smuggling grew, often backed by the army, while assets were moved offshore by over-invoicing.

Suharto quickly made economic changes, establishing his "New Order", with the economic policy set by the Berkeley Mafia, his team of US-educated neoclassical economists. The policy began to be set out in November 1966, following the reaching of agreement with Indonesia's creditors in October 1966 on debt relief and loan restructuring. Economic policies were put in place to require adequate bank reserves, ending subsidies on consumer goods, end import restrictions, and to devalue the rupiah.

The exchange rate of 415 rupiah to the US dollar, which had been established in August 1971, was maintained by government intervention in the currency market, buying and selling currency as needed.[36]

Despite the fixed exchange rate, the failure of the rice crop in 1972, exacerbated by high world rice prices and underordering by the government rice cartel, along with rising commodity prices, caused inflation to rise above 20% in 1972, peaking at over 40% in 1974. The M1 money supply increased sharply over the period due to lax credit controls, which[clarification needed] was channelled towards favoured groups, such as pribumi, as well as corrupt government-linked businesses.[37]

The government abandoned the fixed exchange rate, and altered economic policy to a form of a managed float. The exchange rate was published each day. At the point of devaluation (November 1978), the trade-weighted real (local price adjusted) effective exchange rate of the rupiah[37] against major world currencies was just over twice as high as it was in 1995 (prior to the Asian economic crisis, and free fall of the rupiah), i.e. the rupiah was highly overvalued at this point. By March 1983, the managed float had brought only an 11% fall in three and a half years to Rp702.

The continued overvaluation of the rupiah meant that Indonesia was beginning to suffer a trade deficit, as well as falling foreign exchange reserves. The government responded by devaluing the currency on 30 March by 28% to Rp970.

At this time, the 1980s oil glut put the Indonesian economy under pressure, with exports uncompetitive as a result of the overvalued currency, and oil contributing less as a result of lower global prices. On 1 June 1983, 'Pakjun 1983' brought deregulation of the banking system, and the end of the meaningless 6% official deposit rate, with a more market-based financial system. Credit ceilings were removed. Interest rates, initially 18%, remained above 15% over the period.

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