Home » Practical Information » Banking and Personal Finances
Living in a Rupiah World
Welcome
to a rupiah world! Your daily lives in Indonesia will
be ruled by the rupiah! Even those international companies that may budget in foreign currency, now must invoice all domestic transactions in rupiah by government regulation.
And at long last, you are guaranteed to become a millionaire - during your stay in a rupiah world, that is. The cost of anything over US$75 is the equivalent of millions in rupiah. Be sure you have a calculator that has more than nine digits - as you're going to need it!
You will probably find yourself dealing in cash in Indonesia more than you would in your home country. Personal checks are relatively unheard of for everyday transactions and credit card fraud is always a consideration, so many prefer to deal in cash or debit cards. Also, merchants who accept international credit cards sometimes charge customers the 3% service fee, so cash or debit card is a cheaper alternative in these cases.
The Color of Money
At first glance you will find the bills unfamiliar, of course. If you're one of those people who is just used to green and white bills (Yes, the writer of this article is an American), for example, the virtual rainbow of colors of the various Indonesian banknotes may come as a big surprise.
The currency in Indonesia is the rupiah, which comes from the Sanskrit word for wrought silver, rupya. Indonesian banknotes come in denominations of Rp 2,000, 5,000, 10,000, 20,000, and 50,000, and Rp 100,000.
Coins in circulation include the Rp 1,000, Rp 500, 200, 100 and 50 coins.
Money Mix-Ups
While still learning the currency, it is easy to unintentionally give someone the wrong bill. The ones to look out for are the green Rp 250,000 and Rp 2,000 bills they are very similar in color though the designs are totally different and a slightly different size. Unfortunately, the person on the receiving end of the incorrect amount may say nothing if it is in their favor!
Converting Currency
If figuring out a new currency isn't challenge enough newly arrived expatriates also have the tendency to want to convert the price of items in rupiah to their home currency so that they can determine the “true cost” (to them) of items they want to buy.
After your arrival in Indonesia, it will take a few months of using the currency in order to feel comfortable with the value of various items and what they cost. In the early weeks this will undoubtedly cause a lot of confusion until you are “fluent” in the local currency language.
Learn the Language
An obvious first target when learning the national language, Bahasa Indonesia, is to learn all the numbers and words that describe money and purchasing transactions.
A good pocket phrase book, like Indonesian Words and Phrases can help you learn the specific vocabulary you need for this and other subjects.
Develop a Crutch
Whatever it is, develop some type of aid which will help you in the early days to determine the equivalent value (in your home currency) of things you want to buy. This could be a simple card that you keep in your purse/wallet which lists the conversion for each rupiah bill ... and on the back side, put the reverse for your own currency. Something like:
|
|
An aid such as this can help you to more quickly determine the value of an item you want to buy, or that someone is offering you.
There are many websites where you can check current currency rates.
Online Apps
Online apps are an easy way to get current exchange rates.
Exchanging Foreign Currency
You can exchange foreign currency in major cities throughout the archipelago at banks and money changers. They may only deal in only 7-8 major currencies. For other currencies, you will have to order ahead. You may also have difficulties in getting small denomination bills. Not all money changers will have a large supply of the smaller denominations of currency. Most commonly carried are the US$ 50 and $100 banknotes.
If you need a large amount of foreign currency, and you don't have a foreign currency account at your bank, it is best to order the money the day before. Local banks keep a limited amount of foreign currency in their smaller branches.
Exchange rates of Indonesian Rupiah to foreign currencies fluctuate on a daily basis. Major banks will post their daily rates at about 10:30 each morning, after they've received notification from the head office of the opening exchange rates. Each branch banks has to contact their main branch to get the rate of exchange for each transaction. There may be small deviations from the posted rate in the bank, depending on how big your transaction is. Trading of foreign currency in banks usually ends at 2:30 p.m. Money changers may have more flexibility in when they'll allow you to exchange foreign currency, but they will use the closing trading price of the that day. On the weekends you will pay a slightly higher premium, as they will hedge the opening price for the Monday slightly.
Compare exchange rates at banks and money changers that are near your place of business or home. Call around to various banks until you get a sense of which ones offer better rates, in general, than others. Be forewarned, they will all give you different rates, even on the same day. And often even different rates throughout the day, due to currency fluctuations. The worst rates are generally found in hotels.
Helpful Currency Conversion Links
BCA Kurs - eRate Konverter
Money Changers
Money changers are found in areas where foreigner tourists congregate: in malls, hotels, near concentrations of budget accommodations, and in major business districts.
A money changer may be more likely to help you locate a hard-to-find currency than a bank. You may also be able to “bargain” for a better rate at a money changer, if you have a significant amount of foreign currency that you want to buy or sell.
As with any large cash transaction, be sure to ask a security guard to escort you to your car after exchanging a significant amount of funds.
When US Dollars and other Foreign Currencies are an Investment Tool, not Simply Cash
The average traveler to Indonesia will undoubtedly be shocked when they take their perfectly good US dollars (or other major foreign currency) to a money changer or bank in Indonesia to find that the staff refuses to exchange the money into Indonesian rupiah, because of a small (or even minuscule) fold, ink mark, rip, wrinkle or imperfection of any kind. Some money changers may exchange these used bills but will “discount” the transaction (Rp 1,000 or more off for each imperfection) if the bills are imperfect in any way.
You may also find that you will be offered different rates for a US$ 50 bill vs. a US$ 100 bill in a money changer ... less likely in a bank. The smaller denomination bills get a lower rate than the $100 bills. Note also that pre-1999 banknotes are NOT accepted by most banks.
If you want to use US dollars for transactions in Indonesia or want to have some on hand for emergencies, be sure that you have mint-condition, crisp, clean bills with no imperfections. And when we say mint condition, we mean mint condition US dollars are easily exchanged ONLY IF they are without any mark, fold or imperfection of any kind. You will soon find that it might be challenging to exchange used bills that have been in circulation. Hundred dollars bills are the preferred bill.
This may actually sound crazy but it is TRUE. And these are not isolated instances, but generally accepted practice. You'll be hard pressed to be able to use the non-mint-condition bills you bring with you to Indonesia ... forewarned is forearmed.
You may need to request uncirculated currency from your bank in your home country ahead of time, in order to have access to unused bills.
Buy/Sell Rates
Major banks offer different rates for buying and selling foreign currency, as well as for TC - traveler's checks. The buying rate is when the bank buys from you and the selling rate is when the bank sells to you. The difference, or spread, is the profit the bank makes off these transactions.
The difference in the spread can make a big difference in the amount you receive if you are exchanging large amounts of current. Shop around for good rates so you don't lose in the exchange.
Currency Fluctuations
With the ups and downs in the value of the rupiah against foreign currencies you may be wise to keep excess funds in a foreign currency, as opposed to in rupiah, changing only the amount you need into rupiah for your daily needs.
The most dramatic example of the currency fluctuations in recent history was during the first year of the economic crisis (1997-1998) the rupiah exchange rates fluctuated from Rp 2,450/US$ 1.00 to Rp 17,500/US$ 1.00 and then back down to Rp 7,750 by the end of 1998.
With each major political development or minor hiccup in the political agenda, the rupiah value seems to slip or slide a bit more. So don't be surprised to find quite significant fluctuations from week to week.
Devaluation
Seasoned veterans (often referred to as old timers) can tell you stories of the occasions when the Indonesian government used devaluation as a tool to help solve economic problems. Major devaluations of the rupiah took place in 1978, 1983, and 1986.
What occurs in a devaluation is that the government makes an announcement stating the new rate of the rupiah against the US dollar. In 1978, the rupiah went from 415 to 620 to the US dollar. In 1983 from 620 to 1000 to the US dollar.
Currency devaluations hit the economy like a bomb. While fortunate expats making a foreign currency salary reap the benefit of getting more rupiah for their foreign currency, all around them, the Indonesians who are paid in rupiah (the vast majority) are suffering catastrophic inflationary pressures from the increased price of goods.
Imported goods are re-marked with a higher rupiah price tag. You'll start seeing changes in prices on the store shelves within hours or days of the devaluation announcement. While many items are produced in Indonesia, they may be made from imported raw materials. Therefore, the prices of these finished goods will soar as well. You quickly learn which products use imported ingredients by the rising prices.
Worn Out Money
Money stays in circulation in Indonesia for a long time. In most countries,
banks will take the damaged or marked 
bills
and turn them into the government for replacement. But much of the money
in circulation in Indonesia never makes it into a bank. Thus it just keeps
circulating until it's brown and in terrible shape and falling apart.
Yet, people still keep accepting it as legal tender.
This worn out money is often referred to as pasar money because you usually get it in change from the pasar (traditional market). You should note, however, that it is not considered polite to pay someone with excessively dirty bills the recipient may be offended and would certainly prefer you give them cleaner money.
So, what do you do with these bills? Like everyone around you you use them at the pasar, to pay toll fees or for those bothersome self-appointed traffic control people on Jakarta streets.
Your bank should be able to provide you with new money, though you may need to order small bills ahead. Small bills are in low supply due to various supply and production problems. Rp 500 and Rp 1000 coins are being used more and more for change, weighing down everyone's wallets.
Counterfeit Money
Counterfeit money is found around the world; Indonesia is no exception.
The most commonly counterfeited bills have been the larger bills. There are news reports of the capture of various individuals involved in counterfeiting in Indonesia. While it does reassure the populace that the police are trying to catch the criminals - it also makes you more worried about receiving counterfeit money yourself.
Ultra-violet lights or special pens are used in many banks and places of business to check the bills you present to them to see if they are counterfeit. If you are taking money from a bank and want to ensure that the bills are not counterfeit, ask them to check your bills under the light before you accept them.
Don't think that just because you are withdrawing funds from a bank that the money is guaranteed safe. Although the banks do their best to never accept or give out these counterfeit notes, it is a challenging task considering the amount of bills that they process on any given day. Once you walk away from the bank counter, any discovered counterfeit bills become your loss.
Staid Old Green Bills
The opposite side of the coin to adjusting to the money once you get here ... is adjusting back to the local currency when you get home. In the US, for example, a dollar is just a dollar, and prices and banking are so much simpler to understand!
A true story of one expat's adjustment back to money in her home country:
“After our first 4 years in Indonesia, we were very accustomed to using rupiah. On my first trip home after these four years, I remember the first time looking in my wallet after I'd made it to the bank to change the US$ 100 bills acquired in Indonesia into smaller bills. The first time I went to pay for something, I was confused. 'How do you tell the bills apart?' I quizzed my mom. She looked at me even more confused than I. 'But they are all the same COLOR!' I said, like that explained it all. Fortunately, since she'd visited Indonesia. she knew exactly what I meant!”
Collecting Indonesian Banknotes and Coins
The history of any nation can be seen through its currency and Indonesia is no exception. Old coins dating back to the Dutch colonial area, Japanese occupation banknotes, Portuguese colonial issue for Timor, bills from the Soekarno era and those depicting ex-president Soeharto can be found easily in major cities across Indonesia.
In Bali, old (and new) Chinese coins, used extensively in Balinese Hindu ceremonies, can be found sewn onto clothing and made into jewelry and statuary. If you are interested in collecting coins or banknotes, you can find them at some shops that cater to tourists, the “junk/antique” section of traditional markets (pasar), and specialized stores.
Have fun learning how to use the rupiah and soon you'll have your own tales of miscommunications, problems and fun which occurred when you began ... Living in a rupiah world!
This article was written by a layperson (not an economist), so please forgive our simplistic explanations of vastly complex economic issues!
Last updated December 22, 2020