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Why Indonesia’s sinking rupiah is a flashing alarm for its $1.4tn economy 

Indonesia’s rupiah is trading at record lows against the US dollar, stirring memories of the 1997-98 Asian financial crisis.

While the rupiah has been battered by the market uncertainty stemming from US President Donald Trump’s sweeping tariffs, the currency’s slide began weeks before Wednesday’s “Liberation Day” announcement.

Since the inauguration of Indonesian President Prabowo Subianto in October, the rupiah has slid about 8 percent against the dollar amid concerns about the former general’s stewardship of Southeast Asia’s biggest economy and most populous nation.

The rupiah’s plunge mirrors the collapse of the currency in 1998, which led to a financial crisis that helped bring about the end of three decades of authoritarian rule by President Soeharto.

“What’s happening in Indonesia now reflects how confident global investors and markets are in the economic decisions of the current leadership,” Achmad Sukarsono, an analyst who covers Indonesia at the Control Risks consultancy firm in Singapore, told Al Jazeera.

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When did the slump begin?

The rupiah has been falling steadily since shortly before Prabowo took office, hitting an all-time low of 16,850 on Tuesday.

While the rupiah has seen its share of highs and lows over the past 28 years – including throughout the COVID-19 pandemic – its fall below the 1998 threshold is psychologically important for Indonesians because of the currency’s role in Soeharto’s ouster, according to Hal Hill, a professor emeritus of Southeast Asian economies at the Australian National University (ANU).

“There’s still that memory that if the Indonesia rupiah declines quite a bit, people start to get edgy, and they think it’s a repeat of the earlier crisis,” Hill told Al Jazeera.

What is driving the plunge?

Currencies depreciate for several reasons, including political uncertainty, inflation, trade imbalances with other countries, and speculation by investors.

In the case of Indonesia, Prabowo’s policies – including a $30bn free school lunch programme, plans to weaken the independence of the central bank, and restrictions on foreign companies such as Apple – have shaken investors’ faith in the economy.

“It’s all about heightened uncertainties” and a “significant drop in market confidence”, Arianto Patunru, an economist and fellow at the ANU Indonesia Project, told Al Jazeera.

Prabowo’s establishment of the Danantara sovereign wealth fund using $20bn in government funds, and his push to allow members of the military to hold more civilian posts – a move that critics have said hearkens back to Soeharto’s dictatorial rule – have also stoked concern.

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Last month, Finance Minister Sri Mulyani Indrawati, who was widely credited for her role in steering Indonesia through the 2007-09 global financial crisis, was forced to dispel rumours that she planned to resign amid the turmoil in the financial and currency markets.

On top of its domestic challenges, Indonesia, like many developing economies, is at the same time grappling with the double whammy of China’s economic slowdown and the fallout of Trump’s escalating trade war.

In his “Liberation Day” announcement on Wednesday, Trump unveiled a 32 percent tariff on Indonesian imports.

How is Indonesia’s economy faring overall?

Indonesia, a middle-income country with a per capita gross domestic product (GDP) of $4,960 in 2024, has seen its economy grow at a solid pace in recent years.

GDP rose by more than 5 percent last year, after similar expansions in 2023 and 2023.

But those headline figures do not capture a marked deterioration in living standards for large numbers of Indonesians.

The number of Indonesians classified as middle class by Jakarta’s Central Bureau of Statistics – defined as those with monthly outgoings of between 2 million rupiahs ($118) and 9.9 million rupiahs ($585) – fell from 57.3 million in 2019 to 47.8 million last year, a decline attributed to factors including higher inflation and the lingering effect of COVID-19.

In March, former finance Minister Muhammad Chatib Basri described the country’s middle class as an “economically distressed population” with a weakening purchasing power and limited savings.

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“Indonesia is in its most challenging and difficult period since the 1997-98 Asian financial crisis and there are both domestic and international reasons for that,” ANU’s Hill said.

“The domestic reason is a new president. The business community is still trying to work out where he wants to go and manage the fiscal situation, and that’s combined with the external environment.”

Control Risks’ Sukarsono said the country’s economic challenges raised questions about Prabowo’s priorities.

“When the government should focus more on factors that have caused the current shrinking of the middle class, it is bafflingly more preoccupied with programmes that do not address the decline in purchasing power and the waves of layoffs amid the deteriorating condition of the labour-intensive segment of the manufacturing sector,” Sukarsono said.

 

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Hope, Heritage, and the Heart: St. John Celebration Parade Honors a Young Dreamer and a Community in Motion

The streets of Cruz Bay pulsed with music, color, and movement Friday as St. John’s Celebration Parade brought “Love City’s” Carnival season to a festive finale. Under a high Caribbean sun and with the ocean breeze offering brief moments of relief, dancers twirled in feathers, steel pans rang out, and thousands lined the sidewalks to cheer on royalty, troupes, and moko jumbies.

But amid the jubilant revelry, one of the most powerful moments came in the form of quiet strength—when 13-year-old Devarje “DJ” Daniel, a cancer warrior from Houston, Texas, fulfilled a dream that’s carried him through more than a dozen brain surgeries.
Wearing his new Virgin Islands Police Department badge, marshal, DJ rode with pride and purpose, greeted warmly by the crowd as he waved from the parade route. His visit to the territory was made possible by the Police Benevolent Association, which connected with DJ’s father, Theodis Daniel, during National Police Week in Washington, D.C., and quickly moved to help honor the teen’s wish: to be a police officer.
DJ, who was first diagnosed with brain and spinal cancer at age 7 and given just months to live, has since defied the odds, beating cancer once—and continuing to persevere through its latest challenges. In the process, he’s been sworn in by more than 900 police departments across the United States. “After I reach 1,000, I’m just going to keep going,” he said. “Like I always say, I’m going to keep on going until my gas tank runs out.”

His dad, standing proudly beside him, added, “He’s fought a good fight. He listens, he loves people, and he takes time to make everyone else feel happy. We hope the world can look at that and change some of the ways they behave. If a 13-year-old wouldn’t give up after 13 brain surgeries, then why would you?”
As DJ spoke of the dream he’s still chasing and the father who helped him get there—“some kids don’t have dads like this,” he said—the parade seemed to pause for a breath as he was greeted and honored by VIPD’s top brass, including Commissioner Mario Brooks, a reminder of the hope and resilience at the heart of the season.
Not long after, the energy on the road surged with bright bursts of color as St. John’s Celebration royalty made their grand entrance. Princess Trinity Walters dazzled in a brilliant orange ballgown, waving gracefully from a cherry red convertible. Close behind was Queen Jah’Millia Maloney, whose reign began mid-June and was made all the more memorable, she said, by St. John’s unique tradition of a second crowning ceremony during the annual Food Fair. “It’s something special,” she said. “It makes us different from the other islands in a really meaningful way.”
Junior Calypso King Prince Rainey, age 10, was all smiles as he reflected on his favorite parts of the season. “I like the decorations the most—and the food in the village. The johnny cakes and fries and hot dogs!” he said, beaming as he waved to the crowd.

Adding rhythm and heart to the festivities, the St. John Pan Dragons steel orchestra returned from a recent victory in Virginia to perform for their home crowd. With 25 members ranging in age from 9 and up, the group has long been a staple of the local arts scene. Elaine Penn, a volunteer for more than two decades, said recruiting the players is the hard part—but once they’re in, the learning flows. “They’re enthusiastic,” she said. “It’s all percussion—if you hit it in the right place, it gives you the sweet notes.”
Students from the St. John School of the Arts carried the energy forward with a decades-themed dance routine, time-traveling from the 1960s to today with moves set to The Supremes’ “Baby Love,” Michael Jackson’s “Don’t Stop ‘Til You Get Enough,” and Whitney Houston’s “I Wanna Dance with Somebody.” The performance ended in 2025—right back on St. John—with “Carnival is We” playing as the dancers, dressed in gold and silver metallic costumes, brought the crowd to their feet.
Adult troupes made just as big of a splash. The Gypsy Carnival Troupe, one of the territory’s oldest, took the road with a performance themed “Broo Nansi Jam,” celebrating troupe honoree Lillian Garfield as the wise storyteller at the heart of their tradition. Characters along the route included tropical birds, a mongoose, and Anansi the spider—one of Garfield’s favorites.

“We’re young at heart and young in spirit,” Garfield said. “That’s what the Gypsies are all about—checking on each other, having gatherings, keeping the energy up. That’s what being a family is all about.”
Elskoe and Associates also returned with a showstopping entry that honored everyday island life with scenes from a typical Virgin Islands day—from sunrise to market runs, cleaning house, and fishing. The float featured a traditional-style home, complete with an outhouse, while dancers wore costumes blending modern Carnival flair with vintage designs. “Carnival is in the blood,” said organizer and costume designer Alrid Lockhart, who spoke about years watching aunts and uncles take part, and reflecting on his creations with the troupe. “You can always do feathers, but I try to come up with concepts that reflect where we come from—that mean something.”
Other local entries included the St. John Cheer Squad, youth dancers from the Police Athletic League, and the St. Thomas Majorettes, which performed stunts and acrobatics supported by a dedicated crew of volunteers managing props along the route. Moko jumbies loomed overhead, clowns darted between troupes, and seniors hosted by the Department of Human Services waved from shaded viewing areas along the sidelines.

Among them was Wilma Phillips, a retired government worker and longtime Carnival participant. “The only one I missed was last year because I was off island,” she said, smiling. “I love it. I’m just sorry I can’t take part in it anymore.”

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