How the Indonesian Rupiah Made Everyone Feel Poorer While the Country Got Richer
Behind Indonesia’s success lies a quiet economic tension: a soft currency that shrinks middle-class buying power and global confidence.
In the tale Indonesia likes to tell about its post-1998 rebirth, one message has been sung loud, proud, and maybe even a little too often: we’re a success story now. The economy grows at a respectable 5 percent, the airports have more glass, the highways are smoother, and even the trains have names that sound fast. Poverty rates are down, and the IMF doesn’t pop in every other month like it used to. We’ve graduated from crisis-prone teenager to investment-grade adult. Even McKinsey seems convinced, and they rarely lie… unless you count optimism as a kind of deception.
But let’s be honest.
If you’re a university graduate, and work a full-time job, there’s a decent chance you still feel… poorer than the storyline suggests. Not in the headline stats, but in the margins. Life isn’t collapsing. It’s just quietly expensive. Your salary technically increases, but somehow your wallet stays thin. A holiday to Bangkok requires budgeting like a G20 summit. Replacing your phone now feels like a small financial crisis.
And maybe it’s not bad budgeting. Maybe it’s the rupiah. Once a symbol of national recovery, the currency now specializes in shedding value. Quietly. Relentlessly. And when stacked next to other Southeast Asian currencies, the IDR underperforms.
We Built a Nation (But Not a Strong Currency)
Indonesia has pulled off an impressive transformation since 1998. It clawed its way out of economic collapse, waved goodbye to authoritarian rule, and built the scaffolding of a modern state.
The lights are on almost everywhere.
Roads crisscross the archipelago.
A trillion-dollar economy is now casually thrown into national speeches.
We’ve joined the G20 and even hosted it.
We now make foreign investors build the smelters here, instead of exporting raw rocks like it’s 1987.
But somewhere between building airports and rebranding industrial parks, the rupiah quietly wandered off and never really came back. While other ASEAN currencies grew up and got jobs, the IDR stayed in the basement, still trying to recover from 1998.
That year, a dollar got you Rp2,500. In May 2013, you needed around 9,760 rupiah to buy one US dollar. Today, in late 2025, it’s floating around Rp16,700. That’s after Bank Indonesia has spent a good chunk of its adult life playing defense, burning through reserves to keep it from hitting new lows every time Jerome Powell sneezes.
Meanwhile, the ringgit, baht, and peso are doing what they’re supposed to: more or less holding up. Singapore? The dollar there has kept climbing. You don’t convert SGD to USD. You convert USD to SGD and lose money. That’s status.
The rupiah, by contrast, sits quietly at the back of the ASEAN classroom, hoping no one notices it failed the real effective exchange rate exam again. It’s not entirely the currency’s fault, of course. Inflation, current accounts, interest rates, and “policy signals” all play a part. But when your economy grows and your currency doesn’t, people start to ask questions.
Your Salary Has Risen, Just Not in the Currency You Actually Spend
On the surface, it looks like a win. The Jakarta minimum wage more than doubled since 2013. Average wages across sectors have risen too. Charts go up. Government press releases follow. Everyone claps.
But then reality enters. Because while the rupiah figure on your payslip may be fatter, the value it holds once it leaves your bank account is another story. Take the Jakarta UMP: in 2013, Rp2.2 million translated to about US$225. By 2025, the UMP is Rp5.4 million, and it’s worth... US$323. That’s twelve years of hustle for an extra hundred bucks.
Now throw in inflation. Not the version that statistics agencies advertise, but the one that lives in supermarkets, ticket prices, gadgets, and rental contracts.
Imported coffee? Up.
Sneakers that don’t fall apart in three months? Up.
Flights? Definitely up, especially when the plane runs on jet fuel paid for in US dollars.
And if you’ve ever looked into preschool tuition or tried to buy milk that didn’t come from a powdered sachet, you know exactly what it means to live between globalised aspirations and reality. It’s not a crash. It’s a slow leak.
So yes, your salary has risen. Just not in the currency you use to live the life you’re told is now possible.
The Two-Basket Squeeze: Welcome to Middle-Class Purgatory
In early 2025, the inflation rate hit its lowest point in years.
Electricity tariffs were slashed.
Toll roads were discounted.
Airline tickets were regulated into affordability.
Buses were so subsidised they cost less than bottled water.
Government officials took a victory lap. The CPI was under control. The rakyat should be happy.
But there’s a small problem: the Consumer Price Index doesn’t live your life. It lives someone else’s. Someone with fewer online shopping habits, no aspirations to travel, and no children in private school.
For most educated, upward-leaning Indonesians, life splits into two economic realities. The Survival Basket and the Aspirational Basket.
The survival one is government-approved: rice, chicken, petrol, tofu, and the economy-class bus fare. This basket is stable. Protected. Comfortably subsidised. It helps make the inflation number look good on paper.
The Aspirational Basket is something else entirely. It’s smartphones, dairy, noise-cancelling headphones, a yearly trip abroad, an internet connection fast enough for your job, and a skin serum that isn’t made in a bathtub. And this basket has been absolutely destroyed by the weak rupiah, import costs, and the kind of inflation that doesn’t make it into the official stats.
This is the essence of the two-basket squeeze: you are not getting priced out of survival. You’re getting priced out of modern life. Of feeling global. Of keeping up.
Meanwhile, your social feed is filled with friends in Seoul, Melbourne, or at some minimalist café in Chiang Mai. You’re still toggling between AirAsia baggage tiers trying to decide if the extra 7kg is worth it.
Big GDP Energy, Tiny FX Confidence
On paper, GDP grows at a healthy 5 percent. Debt levels are manageable. Elections happen with a fair bit of ceremony. Indonesia is branding itself as the next electric vehicle hotspot, and to cap it all off, it’s literally building a new capital in the jungle.
But if you zoom back in, into the lived experience of an average, educated Indonesian millennial or Gen Z’er who finished university, secured a stable job, and doesn’t benefit from family wealth, the glow starts to fade. Not because they’re ungrateful. But because something feels off.
You start to notice it when you see friends in Bangkok or Manila earning similar salaries in their own currencies, yet somehow affording better apartments, better flights, and better lives. You see it when local property prices balloon from Rp600 million to Rp1.5 billion in ten years, while your monthly salary creeps from Rp5 million to Rp8 million. And you really feel it when even short regional trips start demanding currency conversions, cost spreadsheets, and small financial sacrifices.
The GDP keeps growing, yes. But the Rupiah that’s supposed to represent that growth has remained fragile. The result is a kind of cognitive dissonance: national headlines are full of optimism, but your wallet is full of hesitation.
It’s about confidence. And for many, the feeling of success is not defined by charts or policy wins, but by the shrinking power of their passport and their pay.
Indonesia is, by most global metrics, a success. The country has electrified its villages, connected its people, expanded healthcare, and paved itself into the middle-income club. Foreign investors nod approvingly. International reports cite progress. GDP charts are up and to the right. By the numbers, this is a nation on the move.
But the experience on the ground often feels misaligned with the data. For many Indonesians, especially those who are educated, urban, and not part of the elite, the progress feels strangely distant. Wages have grown, but slowly. Prices have risen, but unevenly. And the rupiah, the quiet variable most people don’t think about until they try to travel or buy a phone, has been dragging down the purchasing power behind the scenes.
This isn’t collapse. It’s the slow erosion of ambition by currency math.
When you look around and feel like you’re stuck, even as the headlines glow with optimism, you’re not alone. The numbers tell one story. But the everyday economics of modern Indonesian life, like rent, education, food, flights, and tech, tell another.
So next time someone talks about Indonesia’s transformation, smile politely. Then open a currency converter, enter your salary, and let the silence speak for itself.
At StratEx - Indonesia Business Advisory we help regional investors and corporates build FX-resilient, Indonesia-specific growth models. Contact us to understand where sentiment diverges from statistics.