Prabowo’s “Villagers Don’t Use Dollars” Remark Sparks Debate: Rural Indonesians Face Indirect Impacts from Weak Rupiah

Kuala Lumpur – Indonesian President Prabowo Subianto recently downplayed concerns over the rupiah’s sharp depreciation against the US dollar, stating that rural villagers are largely unaffected because they “don’t use dollars” in their daily lives. While the remark aims to reassure the public amid the currency hitting around Rp17,600 per USD, economists highlight that village communities will still feel significant indirect effects through rising prices of imported goods and agricultural inputs.

In a speech during the inauguration of village cooperatives in Nganjuk, East Java, on May 16, 2026, President Prabowo said: “Mau dolar berapa ribu kek, orang rakyat di desa enggak pakai dolar kok.” (No matter how high the dollar goes, villagers don’t use dollars anyway.) He emphasized food and energy security, suggesting that everyday rural transactions remain insulated from currency fluctuations.

The Reality: Imported Inflation Hits Rural Economies

However, experts argue this view overlooks the interconnected nature of Indonesia’s economy. Although rural residents primarily transact in rupiah for local goods, many essential items in their production chains depend heavily on imports priced in dollars.

Key Impacts on Rural Communities:

• Fertilizer and Agricultural Inputs: Indonesia produces urea domestically but relies on imports for phosphate rock, potash (potassium chloride), and other raw materials. A weaker rupiah increases the cost of these inputs, which directly raises production costs for farmers. Higher fertilizer prices lead to increased costs for rice, vegetables, and other crops.
• Fuel and Transportation: Fuel prices, closely tied to global oil markets traded in dollars, affect transportation costs for harvests, seeds, and supplies to and from villages. This cascades into higher prices for everyday goods at local markets.
• Pesticides, Animal Feed, and Machinery: Many pesticides, livestock feeds, and farming tools contain imported components or raw materials. Rising costs here squeeze farmers’ margins and can lead to higher food prices for rural consumers.
• Broader Inflation Transmission: Economists note that “imported inflation” flows through the supply chain—from ports to distributors to village stalls—ultimately affecting even self-sufficient farming households who buy non-food items or sell produce.

Analysts from organizations like CORE and the Center of Reform on Economics (CORE) have pointed out that while villagers may not buy dollars directly, the economic structure of Indonesia—still heavily dependent on imported raw materials—means currency weakness inevitably impacts agricultural productivity and household budgets.

Balancing Optimism and Economic Caution

The government has taken steps to mitigate these pressures, including efforts to boost domestic fertilizer production, subsidize key inputs, and promote village-based cooperatives under initiatives like the Red and White Cooperatives to strengthen local economies.

President Prabowo’s statement appears intended to calm public anxiety and focus on fundamentals like food security. Nevertheless, as the rupiah remains under pressure, maintaining affordability of critical agricultural inputs will be key to shielding rural Indonesians from broader economic headwinds.

The debate underscores a classic economic truth: in a globalized supply chain, even communities far from forex markets are not entirely isolated from international currency movements. Effective policy responses will need to address both perception and the underlying structural dependencies.