Currency Depreciation as a Strategic Tourism Catalyst: Analysing the Paradox of Rupiah Weakness and Inbound Tourism Competitiveness in Indonesia
Keywords:
exchange rate, tourism demand, destination competitiveness, Indonesia, currency depreciation, geopolitical risk, inbound tourism, price elasticityAbstract
The persistent depreciation of the Indonesian Rupiah (IDR) to Rp 17,143 per US Dollar as of 15 April 2026 has generated significant macroeconomic concern. However, viewed through the lens of destination competitiveness theory, currency depreciation presents a paradoxical strategic opportunity for Indonesia's inbound tourism sector. This paper examines the theoretical and empirical relationship between exchange rate movements and tourism demand, situates Indonesia's current macroeconomic position within the global geopolitical disruption emanating from the Middle East conflict, and analyses how depreciating currency — when accompanied by appropriate policy responses — can function as a structural accelerator of destination price competitiveness. Drawing on destination competitiveness frameworks, exchange rate elasticity literature, and geopolitical risk models, the study argues that the conventional narrative of currency weakness as purely detrimental obscures its function as a pricing signal that, if strategically leveraged, can stimulate inbound tourist arrivals, increase tourism foreign exchange earnings, and reinforce Indonesia's position within the competitive ASEAN tourism landscape. The paper concludes with a set of evidence-based policy recommendations tailored to Indonesia's unique structural characteristics as a mega-diverse, price-sensitive destination operating in a geopolitically volatile global environment.
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