Welcome to a rupiah world! While most multinational businesses in Indonesia still plan and budget in a foreign currency, your daily lives in Indonesia will be ruled by the rupiah!

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$ 1`05 is in 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 danger, so many prefer to deal in cash. Many of the individuals you pay for their services will not have their own bank account. Also, merchants who accept international credit cards often charge customers the 3% service fee, so cash 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, I'm 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 1,000, 2,000, 5,000, 10,000, 20,000, and 50,000, and Rp 100,000. Occasionally one sees old Rp 500 notes, although there are very few left in circulation. The Rp 500 and Rp 1,000 will eventually be phased out.

Coins in circulation include the Rp 1,000 (gold and silver colored), Rp 500, 100, 50 and 25 coins. The last three were all minted in aluminum in the late 90s. To confuse us all . old issue and recent issue coins are still in circulation. So, there are two kinds (each) of the Rp 500, 100, 50 and 25 coins currently in circulation. The Rp 50 and Rp 25 coins are mostly used outside large urban centers where prices of goods are lower.

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 blue Rp 50,000 and old Rp 1,000 bills . they are very similar in color though the designs are totally different. 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” 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 AWA's 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.

Get an online version of a "Cheat Sheet" with current rates at Oanda, the Currency Site

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. For example, you can usually only get US$ 50 and $100 banknotes from most money changers and banks.

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, however normally the fluctuation is minor. 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. Banks will not let you exchange foreign currency until the rates are posted. 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.

Compare exchange rates at banks and money changers that are near your place of business or home. Or 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.

Selected rates are posted, for the previous day's trading, in the Jakarta Post and other major newspapers. These are not the official government rates (as none exist), but are usually taken from one bank, which is quoted in the newspapers each day.

Helpful Currency Conversion Links

Today's rates from the Jakarta Post

Today's exchange rates

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 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. Note also that pre-1999 banknotes are NOT accepted by most banks. Some money changers will exchange them, at a discounted price.

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 bills. 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 no one will exchange used bills that have been in circulation.

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.

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. Prior to the economic crisis of the late 90s a common spread was around Rp 200 . now it is common to find a spread of over Rp 1000!

Currency Fluctuations

With the ups and downs in the value of the rupiah against foreign currencies since the beginning of the monetary crisis in 1997, you may be wise to keep your excess funds in a foreign currency, as opposed to in rupiah, changing only the amount you need into rupiah for your daily needs.

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 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 your US dollars (for example) worth Rp 9,500 one day and Rp 10,500 a week later.

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.

You'll also see the prices on some imported items (like computers, designer clothing, etc.) switching to US dollar pricing when the swings of the rupiah become too volatile. When you see the dramatic fluctuations in the rupiah's buy/sell rate you can understand why shop owners begin pricing in a more stable currency.

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 traffic control hoodlums 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

While counterfeit money is found around the world, it has become a serious problem in Indonesia in recent years.

The most commonly counterfeited bills have been the Rp 50,000 and Rp 20,000 bills. In 2000, there were raids and reports of the capture of various individuals involved in counterfeiting in Indonesia. Then, the government withdrew the old issues of particular banknotes from circulation. 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. And you should be, as there are still tens of thousands of counterfeit bills in circulation.

Ultra-violet lights 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. Too often for comfort, a bundle of 100 bills will have several counterfeit bills slipped into the bundle. Once you walk away from the bank counter, any discovered counterfeit bills become your loss.

With all the recent scares about counterfeit money, we thought it wise to include the signs to look for on the larger bills to ensure they are valid.

Characteristics of the Rp 2,000 Banknote (issued July 2009)

Front of the bill

• Self-completing image (rectoverso) - Bank Indonesia logos that complete each other when held up to the light.
• Micro text - Text that cannot be read without optical enhancement: BANK INDONESIA within the number 2000, BANK INDONESIA forming the outline of the island of Kalimantan, DUA RIBU RUPIAH in a circular form and BANK INDONESIA in horizontal lines.
• Raised Code - Specific code in the form of a rectangle to identify the bill for visually-impaired citizens.
• Imprints (intaglio) - The main personality image, value number & text and the national emblem, which feels rough to the touch.
• Security image - An invisible image of Southern Kalimantan that glows yellow-green under ultraviolet light.
• Hidden text - The text BI which can be seen from certain viewing angles.
• Watermarks - An image of the National Hero Prince Antasari that can be seen when held up to the light.
• Mini text - Text that can be read without optical enhancement that says BANK INDONESIA.
• Security thread - A thread embedded in the bill that reads BI200 and glows red under ultraviolet light.

Back of the bill

• Mini text - Text that can be read without optical enhancement that says BANK INDONESIA.
• Serial Number (lower left) - Three (3) letters and six (6) numbers that are unsymmetrical and glow green under ultraviolet light.
• Serial Number (upper right) - Three (3) letters and six (6) numbers that are unsymmetrical and glow orange under ultraviolet light.
• Micro text - Text that cannot be read without optical enhancement that says BANK INDONESIA.

Characteristics of the Rp 100,000 Banknote

On some bills the ink will come off when rubbed by your nail or a sharp object. These are NOT counterfeit . but just a defective print job.

Rp 100,000 notes are genuine if they have the following:

1. There are two clear plastic windows one with a white rice stem and the other with a white cotton in them. They are an almost leaf-like shape under the red window above them.
2. The red colored window above the stems has the logo of the Bank of Indonesia inside it (a capital B with a capital I superimposed over it).
3. The logo is located above the picture of the House of People's Representatives.
4. Print will appear a bit fuzzy when viewed through the window
5. The main picture, and the inscription of Bank Indonesia and the nominal value of the bill will feel coarse when touched.

Characteristics of the Rp 50,000 Banknote

Rp 50,000 notes are genuine if they have the following:

1. Picture of W.R. Soepratman
2. Latent image of the BI logo on Soepratman's left shoulder
3. Metallic safety thread embedded in the right third of the bill, running vertically
4. Metal layer of the BI logo and a drawing of a violin in the upper center portion of the bill
5. BI logo on bottom right corner can change color depending on the position in which you hold/view it
6. Watermark of HOS Cokroaminoto on the right white third
7. Very small text of the song Indonesia Raya to the left of the signatures on the bill's face

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 more 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!

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