A Brief History of the Indonesian Rupiah
The rupiah is the official currency of Indonesia. While its current incarnation was released in 1946, the precursors of the rupiah date all the way back to the colonial period.
Indonesia is a country that has been ruled by several other countries. While the natives of the country have used coin-like items (made out of beads) to trade since the 9th century, it wasn’t until the Europeans arrived that gold coins and silver dollars were introduced into their civilization. These coins arrived at the hands of the Portuguese, the Dutch, and the Spanish. First arriving at the hands of traders, coins, and banknotes were officially adopted in Indonesia with the Dutch conquest in 1600.
The Dutch, and their currency system, remained the official currency of Indonesia until the Japanese invasion in 1942. After liquidating the Dutch banks, the Japanese introduced their own currency (the gulden) into Indonesia. The gulden suffered from massive inflation (mostly due to excessive printing) and hurt the stability of the economy.
At the conclusion of World War II, when the Dutch regained control of Indonesia, steps were made to stabilize the economy by re-introducing Dutch money into the country. However, as the local Indonesians begin to rise up against their colonizers, the type of currency that was used – and who issued it – became a major point of contention.
The native Indonesians were determined to create their own currency and in 1946, the rupiah was issued (the name was derived from its sister currency, the Indian rupee). At first, no international country recognized the rupiah. Instead, from 1946-1950 its value was determined on the black market. However, when Indonesia gained its independence in 1949, steps were made to recognize the rupiah.
Officially recognized in 1950, the rupiah suffered from high inflation, instability and foreign exchange restrictions. Over the years, steps have been taken by the Indonesian government and the foreign exchange market to stabilize the rupiah as much as possible. Surviving several financial crises, the rupiah currently enjoys relative stability even though it remains one of the least valued currency units in the world.
Currently the rupiah is issued by the Bank of Indonesia in both coins and banknotes. One rupiah is technically divided into 100 sen, but inflation has made the circulation of sen obsolete. The current coins in circulation are 50, 100, 200, 500 and 1,000 rupiah. Banknotes are issued in denominations of 1,000, 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000.
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