The Indonesian government is preparing to redenominate the rupiah by simplifying its nominal value, with Rp1,000 to become Rp1.
The plan is detailed in the Ministry of Finance’s 2025–2029 Strategic Plan, under Minister of Finance Regulation (PMK) Number 70 of 2025, issued on 10 October 2025.
The regulation, signed by Finance Minister Purbaya Yudhi Sadewa, states that the government will draft a Bill on Rupiah Price Changes (Redenomination) next year, with completion targeted for 2027.
“The Bill on Rupiah Price Changes (Redenomination) is a draft bill planned for completion in 2027,” the document states, as cited from PMK 70/2025 on Friday (11 July 2025).
According to the regulation, the measure aims to strengthen the credibility of the rupiah and support long-term economic stability. It highlights the need to maintain public purchasing power and a stable currency while ensuring sustainable national economic growth.
“Increasing the credibility of the rupiah,” the regulation signed by Purbaya notes, as quoted on Sunday (9 November 2025).
The proposed simplification, such as converting Rp1,000 into Rp1, is expected to make Indonesia’s financial system more efficient and easier to understand for the public.
Definition and Economic Implications
According to the Big Indonesian Dictionary (KBBI), redenomination is the simplification of a currency’s nominal value without altering its exchange rate or purchasing power. It differs from sanering, which refers to reducing the value of money.
If three zeros were to be removed, the following changes would apply: Rp1,000 becomes Rp1, Rp10,000 becomes Rp10, and Rp100,000 becomes Rp100.
For example, a bottle of mineral water currently priced at Rp5,000 would be listed as Rp5 after redenomination, though its actual value would remain the same.
Economists have urged the government to ensure a gradual and well-communicated transition. Permata Bank Chief Economist Josua Pardede said the process should involve clear coordination with Bank Indonesia (BI) and other relevant authorities.
“The government, together with Bank Indonesia and other authorities, need to prepare a gradual transition schedule,” Josua said when contacted by Kompas.com on Sunday (9 November 2025).
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Piter Abdullah, Senior Economist and Executive Director of the Segara Research Institute, said the discussion on redenomination has existed for years, even before Purbaya’s tenure as finance minister. He explained that the idea emerged after repeated depreciations of the rupiah following economic crises.
“From the beginning of independence until the 1997–1998 monetary crisis, the rupiah exchange rate against the US dollar fluctuated from Rp1 to around Rp2,000 per dollar,” Piter told Bisnis.com on Sunday (9 November 2025).
As of Friday (7 November 2025), the rupiah stood at Rp16,704 per US dollar, based on BI’s JISDOR rate. Piter added that Indonesia’s currency no longer reflects its economic strength.
“We are in the G20, among the top 20 economies in the world, but our currency is perhaps the smallest. If we go abroad, the rupiah is invisible at money changers,” he said.
According to dokumen.dpr.go.id, redenomination will not affect the public’s purchasing power since the value of goods and services remains constant. The change will only alter how currency denominations are written and displayed.
