Your Friend Is Wrong About Currency Exchange Not Affecting Food Prices

Weak rupiah, expensive food. Still think it’s not connected?

Apr 21, 2025

Headlines highlighting the Indonesian rupiah's fall (2025).

Hello and Happy Monday! Welcome to Kepayang, where I (Fabi) write essays about food, sustainability, and culture. I also host the occasional community hangout, so don’t forget to follow Kepayang on Instagram and check in from time to time.

Today’s newsletter is about the rising US dollar, or more accurately, the weakening Indonesian rupiah. While the spike isn’t as extreme as during the 1998 Asian financial crisis, it’s still significant and something we should all be paying attention to. The impact can creep into our daily lives in ways we might not expect, even if we don’t buy our everyday food in dollars. Enjoy the read!

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As an Indonesian, unfortunately, this isn’t my first rodeo reading news about the rupiah losing value. And every time I read it, it still feels worrying. You should be alarmed too.

In the past few months, the rupiah has been plummeting. As of the day this essay is being written, 17 April 2025, the rupiah stands at Rp16,899 against the US dollar and Rp19,199 against the euro, even higher than the rates from the 1998 financial crisis (17 June 1998), when the rupiah was at Rp16,097 per USD and Rp17,805 per EUR.

💲Disclaimer: All exchange rates in this essay are sourced from the Pacific Exchange Rate Service by the University of British Columbia. Slight variations may occur when compared to other services.

USD to IDR in a nutshell:

2023 was relatively stable: Throughout 2023, the exchange rate fluctuated but remained within a narrow range.
Significant depreciation in 2024: There was a noticeable jump in June 2024 (Rp16,348), but it dipped again in September 2024 (Rp15,321).
Continued weakening in 2025: The rate increased again at the end of 2024 (Rp16,037) and continued to rise in March 2025 (Rp16,460). This trend hasn’t stopped as of the day I’m writing this post (17 April 2025), with the rate reaching Rp16,899.

EUR to IDR in a nutshell:

Mild fluctuations in 2023: The euro-to-rupiah exchange rate stayed relatively stable throughout 2023, ranging between Rp16,208 and Rp16,874.
Rupiah weakened in early 2024: From December 2023 (Rp16,874) to June 2024 (Rp17,593), the IDR weakened steadily against the EUR.
Temporary dip in late 2024: The EUR rate dropped in September 2024 (Rp17,012) and slightly declined again in December 2024 (Rp16,797), suggesting a short-term recovery of the IDR.
Sharp increase in early 2025: The EUR rate jumped in March 2025 to Rp17,798 and reached Rp19,199 as of the day I’m writing this post (17 April 2025).

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The depreciation of the rupiah is a clear sign that things aren’t going well, and sadly, many people still don’t realise how serious the impact can be.

Looking at what people are saying online, it’s clear that many still haven’t connected the dots between the weakening rupiah and how it affects their daily lives. It’s OK if you don’t understand and are genuinely asking questions. But to straight-up gaslight others into thinking we’re fine? Just, naur. Here are some interesting tweets and threads I found:

To loosely translate what they say:

LMAO… The dollar going up doesn’t really affect my life. I can still buy rice with rupiah and eat just fine. You, on the other hand, are you starving just because the dollar's up? Bro, maybe spend your money on rice instead of wasting it on data just to tweet nonsense 😂
The dollar hitting 17,000 won’t affect regular folks. We don’t buy rice, chilli, or anything else with dollars anyway.
What’s the connection? It’s not like we buy food in Indonesia using dollars, right?
[Context: people saying the rising dollar value affects the price of food]

One thing to point out is that all of the above tweets and threads were responding to either an article or a post saying that the US dollar had reached 17,000 Indonesian rupiah. And maybe that’s where the misunderstanding starts. Maybe we’ve been framing it wrong by calling it a rise in the US dollar’s value.

Maybe we should start normalising saying that it’s the rupiah that’s falling, so people can actually feel the urgency of what’s happening.

When the rupiah loses value, it basically means we have to spend more rupiah to get the same things. The simplest example is to look at your shopping receipt.

Back in 2023, I only needed to spend Rp49,900 to buy these five random items below. But now, in 2025, I have to spend almost 40% more for the exact same things (Rp70,200).

If you’re asking, “How could this happen?”, inflation is one thing. But there’s also one other thing, and it’s the whole point of this essay today: currency exchange. To clearly see how currency exchange affects food prices, let’s take a few steps back and look at the journey your food takes before it gets to you. From being planted, processed, to finally reaching your plate, every step can be affected.

1. Pre-Production

To grow a crop, you need a lot of materials and equipment. For example, to grow our biggest commodity, rice, we need high-quality seeds that some are still imported from China. Or take another example of vegetables, like broccoli, where the seeds came from Japan, and cabbages that use Taiwanese seeds (Mongabay, 2021). It doesn’t stop there either. Preparing the land also requires farming tools like tractors, fertilisers, and pesticides, all of which are still imported. Of course, we don’t buy our daily food with US dollars. But all the extra farmers' needs are purchased from outside the country and in dollars, which means they become more expensive when the rupiah weakens.

2. Production and Harvesting

After the seeds are planted, the production and harvest phases still rely heavily on imported goods and services, many of which are tied to the US dollar. Irrigation pumps, greenhouse systems, and temperature control tools are often imported, especially for large-scale or high-value crops. Farmers also rely on petrol for machinery like tractors, and if you know, those are priced closely to the global oil markets, which are traded in US dollars. Again, when the rupiah weakens, the cost of operating all this equipment goes up. That means higher production costs, which eventually push food prices higher too, even before the crops leave the farm.

3. Transportation and Distribution

Once the crops are harvested, they still need to be stored, transported, and distributed before they reach consumers, and this entire process is also vulnerable to a weak rupiah. Many logistics costs are tied to imported inputs: trucks and spare parts, cold storage units, packaging materials, and even shipping containers often come from abroad. Petrol, once again, which powers most distribution networks, is linked to global oil prices that are traded in US dollars. So when the rupiah weakens, these costs go up. The result? More expensive food at the market or supermarket, even if the food itself is grown locally.

The truth is, the impact of the rupiah's depreciation is deeply felt in our everyday lives, even though it may not always be obvious at first. From the seeds we use to grow our food, the fuel that powers our farms, to the trucks that transport goods to markets, every step in the food supply chain is tied to the global market and vulnerable to fluctuations of the rupiah. In the end, a weakened rupiah means we’re paying more for the same things, and this puts additional strain on our purchasing power.

Have you noticed any rising costs in your daily expenses?