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Why is nobody talking about rupiah redenomination anymore?
Rupiah redenomination has been in the cards for more than a decade, but the stars may now be aligning for scrapping three zeroes from the Indonesian currency as economic and political stability, alongside low inflation and strong foreign exchange reserves, would facilitate such a move.
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Rp 50,000 banknotes are handed out in Jakarta on Feb. 25, 2025. (JP/Sanrais RB)
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upiah redenomination has been in the cards for more than a decade, but the stars may now be aligning for scrapping three zeroes from the Indonesian currency as economic and political stability, alongside low inflation and strong foreign exchange reserves, would facilitate such a move.
For Indonesia, the idea behind redenomination, which is a process of changing the nominal value of banknotes and coins in circulation, is primarily to get rid of three zeros, so the Rp 50,000 (US$3.05) bill would become a Rp 50 bill but could buy the same amount of goods, as prices too would be divided by 1,000.
Thinking or talking about prices without the three zeros is already common practice for many Indonesians, and in writing, stores and eateries often replace them with the letter “k”.
Siti Hasanah, a 56-year-old street vendor and laundry business helper in South Jakarta, said she commonly said just the first two digits when quoting a price, such as “ten” for Rp 10,000.
Many Indonesians only say the word “thousand” when the last three digits are not zero.
Speaking to The Jakarta Post on Feb. 25, Siti said “it would be more practical” if the rupiah were redenominated, given that the cheapest item in her stall was Rp 2,000, but she was concerned that the rupiah would get weaker in the process.
Bank Permata chief economist Josua Pardede said that unlike currency devaluation, redenomination did not bring down the exchange value of a currency.
