The Indonesian government, through the Ministry of Finance, is finalising a plan to simplify the rupiah currency, scheduled to take place in 2027. Under the redenomination scheme, the value of the rupiah will be adjusted so that Rp1,000 will be worth Rp1.
The plan began with the drafting of a Bill (Rancangan Undang-Undang or RUU) concerning Changes in the Rupiah Value (Redenomination). Technical regulations related to currency simplification are also included in the Minister of Finance Regulation (Peraturan Menteri Keuangan or PMK) Number 70 of 2025, concerning the Ministry of Finance’s Strategic Plan for 2025–2029.
The document states that the Redenomination Bill is expected to be completed and implemented in 2027, as part of efforts to strengthen the financial system and facilitate economic transactions.
According to the Big Indonesian Dictionary (Kamus Besar Bahasa Indonesia or KBBI), “redenomination” refers to the simplification of the rupiah’s value without altering its exchange rate. It’s important to note that redenomination differs from “sanering”, which means reducing the value of money. Simply put, rupiah redenomination is the simplification of the nominal value of money without changing its exchange rate or purchasing power.
The idea of redenomination is nothing new. The government and Bank Indonesia have been discussing this plan since 2010, but it is now being revisited under the leadership of Finance Minister Purbaya Yudhi Sadewa.
The Head of the Communications Department of Bank Indonesia (BI), Ramdan Denny Prakoso, explained that rupiah redenomination will not reduce purchasing power or the value of the rupiah in relation to the price of goods and/or services. Moreover, he confirmed that the redenomination process was carefully planned and involved close coordination between all stakeholders.
“This is a strategic step to increase transaction efficiency, strengthen the credibility of the rupiah, and support the modernisation of the national payment system,” Prakoso said in a statement on Monday, the 10th of November.
Previously, Bank Permata Chief Economist Josua Pardede assessed that redenomination is ideally implemented when macroeconomic conditions are stable, including low inflation, a controlled exchange rate, solid economic growth, and a conducive socio-political situation. Pardede estimated that the entire redenomination process could take 8–11 years, consisting of three phases: preparation, transition with dual pricing, and withdrawal of old currency.
“Redenomination differs from devaluing currency. The goal isn’t to reduce purchasing power, but rather to increase efficiency and positive perceptions of the rupiah,” Pardede previously said on Sunday, the 9th of November.