With the Rupiah experiencing volatility, official data shows a notable rise in foreign currency deposits, reflecting a search for stability among local depositors.
JAKARTA — A noticeable shift is occurring in Indonesian bank accounts as the national currency faces headwinds. Recent data reveals a rise in foreign currency savings, primarily in US Dollars, coinciding with a period of Rupiah weakness that saw it approach the Rp 17,000 per USD threshold.
According to the Indonesian Deposit Insurance Corporation (LPS), third-party funds (DPK) held in foreign currencies grew by 3.73% in the latest reporting period. This uptick suggests a growing preference among domestic depositors to hedge against local currency depreciation, even as banks lower the interest rates offered on these foreign accounts.
“In nominal terms, there was an increase in foreign currency DPK of 3.73%,” stated Ferdinan D. Purba, an LPS Commissioner, during a press conference on Saturday, January 24. “Although there is an increase in the nominal amount, the trend for its interest rates… is declining.”
Interest Rates Decline Amid Ample Liquidity
LPS interprets the falling interest rates on foreign currency savings as a sign of sufficient US Dollar liquidity within the banking system. This means banks feel less pressure to offer high premiums to attract dollar deposits. The LPS has consequently maintained its guaranteed interest rate for foreign currency savings at 2.00%.
LPS Chairman Anggito Abimanyu emphasized the institution’s coordination with Bank Indonesia (BI) and the Financial Services Authority (OJK) to maintain financial system stability but clarified that LPS does not set exchange rate policy. “Regarding the stance of Bank Indonesia, which always strives to stabilize the Rupiah… BI works to reduce volatility and make the Rupiah’s movement more predictable,” Anggito noted.
Recent Rupiah Recovery and Bali’s Economic Lens
The Rupiah opened stronger on Friday, January 23, appreciating 0.47% to Rp 16,800 per USD, continuing a positive trend from the previous day. While welcome, such volatility underscores the economic uncertainty driving the move toward dollar savings.
For Bali’s economy, which is deeply integrated with global tourism and foreign investment, a stable Rupiah is crucial. A weaker currency can increase the cost of imports—from construction materials to certain goods—potentially affecting prices on the island.
Conversely, it can make Bali more affordable for international visitors. The trend of dollar savings reflects a national financial caution that resonates with Bali’s many expatriate residents and international business owners, for whom currency decisions are a routine part of financial planning.
The LPS has stated it will continue monitoring foreign currency deposit trends and interest rates to ensure its guarantee policies remain aligned with market conditions and support overall banking system stability.
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