History of the Indonesian rupiah facts for kids

The Indonesian rupiah is the money used in Indonesia. It has a long and interesting history, going back to when Indonesia was a colony. Because of tough economic times and high inflation (when prices go up a lot), the rupiah's value has changed many times over the years.

Early Money in Indonesia (800–1600)

The first types of coins found in Indonesia were made around the 9th century. These were gold and silver coins called massa, tahil, and kupang. They often had the letter 'ma' or a sandalwood flower on them.

People also used strings of beads as money, especially in the eastern islands like the Maluku islands. Later, when Chinese traders arrived, they brought copper coins with holes in the middle, known as cash. Indonesians then started making similar coins from tin or lead.

Dutch Colonial Money (1600–1942)

When Europeans came to Indonesia, they brought their own money. Spanish silver dollars from Mexico became very popular for trading. In the 1600s, the Dutch East India Company (VOC) took control of trade in the Indies. They brought in Dutch coins and Spanish dollars.

To make smaller change, the VOC started making their own copper coins called 'duit' in 1724. These coins had the 'VOC' brand on them. They also minted some silver and gold coins locally.

The first paper money appeared in 1752, but it often lost value because there wasn't enough metal money to back it up. The VOC went bankrupt in 1799, and the Dutch government took over.

In 1854, the Dutch changed their money system to a decimal system. The 'duit' coins were replaced by 'cent' coins. They issued coins from half a cent up to a quarter of a gulden. Larger silver and gold coins were also used. This system continued until Indonesia became independent.

A new central bank, De Javasche Bank, was set up in 1828. It was much more stable than earlier banks and later became Bank Indonesia.

Japanese Invasion and Independence (1942–1949)

Japanese Occupation and New Money

In 1942, Japan invaded Indonesia and took control. They brought their own version of the local money, the gulden. The Japanese government printed a lot of this money, which caused hyperinflation. This means prices went up incredibly fast. People started hiding their old Dutch money because it was worth more.

By the end of the war, the amount of paper money had increased massively. This caused huge problems for the economy. In 1944, the Japanese started printing notes in Indonesian language, called the Netherlands Indies roepiah, to encourage Indonesian nationalism.

Dutch Return and NICA Gulden

After Japan surrendered in 1945, the Dutch government tried to regain control. They issued new money called the 'NICA gulden' (Netherlands Indies Civil Administration gulden). These notes were printed in Dutch and had a picture of the Dutch Queen Wilhelmina.

However, Indonesian leaders like Sukarno immediately declared the NICA notes illegal in areas they controlled. This led to a confusing situation where different types of money were used in different parts of Indonesia. The Japanese money continued to be used in some areas, and its value kept dropping.

The First Indonesian Rupiah (ORI)

The Indonesian Republican government wanted to have its own money. They started printing their first notes, dated 1945. These notes were called 'Oeang Republik Indonesia' (ORI).

On October 3, 1946, the Indonesian rupiah was officially issued. The government told people to deposit their Japanese money with Republican banks. For every 50 Japanese rupiah, people would get 1 new ORI rupiah. This was a way to reduce the huge amount of money in circulation and control inflation.

One ORI rupiah was said to be worth 0.5 grams of gold, similar to the old Dutch currency. However, this was not backed by actual gold. People worried they wouldn't get their money back, so they rushed to buy goods, causing prices to skyrocket.

The new Indonesian rupiah faced many challenges. It was hard to print enough money, and fake notes were common. The currency quickly lost value due to the government printing more money to pay its bills.

Over the next few years, the Republican government issued several more series of banknotes, all printed in Yogyakarta, their stronghold.

Dutch Money (1947–1949)

The Dutch also issued new money from 1947, with both Dutch and Indonesian text. They also brought back some old pre-war money. Because of inflation, old coins became worth more as scrap metal, so the Dutch issued treasury notes instead. These notes were popular because they were in Indonesian and said they were issued by 'Indonesia' (meaning the Dutch administration).

Local Banknotes (1947–1949)

Since the Republican government didn't control all of Indonesia, local areas in Sumatra and Java started printing their own money. This helped replace the Japanese money and stop the NICA gulden from spreading. These local notes had different designs and showed where they were issued.

Independence and the New Rupiah (1949–1958)

Indonesia Becomes Independent

In November 1949, Indonesia gained independence from the Dutch. The new country was called the Republik Indonesia Serikat (United States of Indonesia). It was agreed that De Javasche Bank would become Indonesia's central bank again.

A short-lived series of notes was issued by the "Republic Indonesia Serikat" in 1950. But soon after, the separate states merged into a single Republic of Indonesia.

The Sjafruddin Cut

There was a huge amount of different money in circulation. To fix this, the finance minister, Sjafruddin Prawiranegara, decided to cut the money supply in half. From March 19, 1950, people had to cut all their banknotes of 5 gulden and higher in half. The left half could be exchanged for new banknotes, and the right half became a government bond. This helped reduce the amount of money and control prices.

Old Republican Indonesian notes were no longer valid after May 1, 1950. The first Indonesian rupiah notes were exchanged for new ones at a rate of 125 old rupiah for 1 new rupiah.

Bank Indonesia is Born

In 1951, Indonesia decided to take full control of its money system. They nationalized De Javasche Bank, meaning the government took ownership of it. This bank officially became Bank Indonesia on July 1, 1953. Bank Indonesia then became responsible for issuing all banknotes and coins.

Currency Changes and Inflation (1959–1965)

Indonesia faced serious inflation, with prices tripling between 1953 and 1959. President Sukarno wanted to reduce the value of the currency.

On August 1, 1959, the rupiah was officially devalued. This meant its value against the US dollar dropped significantly. Also, the 500 Rp and 1000 Rp notes were devalued by 90%. This meant that the largest banknote in circulation became 100 rupiah.

The Rupiah Revaluation (1965–1991)

Inflation continued to get worse, reaching 600% in 1965. The largest banknote grew from 100 rupiah to 10,000 rupiah in just a few years. Because of this, a "new rupiah" was introduced on December 13, 1965. One new rupiah was worth 1000 old rupiah. This helped simplify prices and transactions.

By 1968, the new government under Suharto gave Bank Indonesia the sole right to issue all banknotes and coins. New coins were brought back, and higher denomination banknotes like 5,000 and 10,000 rupiah were introduced as inflation came under control.

Before and After the Financial Crisis (1992–1999)

By 1992, the rupiah had lost a lot of its value, so a 20,000 rupiah note was introduced. This was the largest note at the time.

The Asian financial crisis of 1997–1998 hit Indonesia hard. The rupiah's value dropped by over 80% in just a few months. This was a big reason why President Suharto's government fell. The rupiah went from about 2,000-3,000 per US dollar to a low of 16,800 per dollar.

After the crisis, new designs for the 10,000 and 20,000 rupiah notes were made. In 1999, a new 50,000 rupiah note was introduced, and a brand new 100,000 rupiah note, which was worth about US$12 at the time.

The 100,000 rupiah note was first printed on plastic (polymer) because it was thought to be harder to counterfeit and would last longer. However, banks found them difficult to count, so Indonesia later went back to using paper notes.

New Designs and Coins (2000–2016)

Between 2000 and 2005, Bank Indonesia redesigned all its banknotes. The 100 and 500 rupiah notes were stopped because they had lost too much value. New, more secure designs were introduced for other notes.

On December 19, 2016, Bank Indonesia launched a completely new design for all rupiah banknotes and coins. The new notes included the text Negara Kesatuan Republik Indonesia (Unitary State of the Republic of Indonesia) instead of just Bank Indonesia.

Rupiah Redesign (2022)

On August 18, 2022, Bank Indonesia introduced an updated design of the 2016 banknotes. They kept the same pictures but improved the colors and added new safety features, like magnetic ink, to make them even harder to fake.

Plans to Simplify the Rupiah

Since 2010, Bank Indonesia has been thinking about simplifying the rupiah by removing the last three zeros (dividing by 1000). For example, Rp14,600 would become Rp14.6. This would make daily transactions easier, as amounts often run into millions of rupiah.

Bank Indonesia says this change would not cause anyone to lose money. It would just make the numbers smaller and easier to manage. The plan has been delayed due to events like the coronavirus pandemic, but the central bank still hopes to do it when the economy is stable.

Images for kids

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  One Gulden note from the Japanese occupation of the Dutch East Indies.

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  One rupiah from the first Indonesian banknote series (1945). It shows Sukarno on the front and a smoking volcano on the back.