It replaced the Japanese-issued version of the Netherlands Indies gulden which had been introduced during the Japanese occupation in World War II.

In 2017, Bank Indonesia Governor Agus Martowardojo reiterated the call, saying that if redenomination started immediately, the process could be complete by 2024 or 2025.

[33] This situation ended when the federal government, now in complete control following the Dutch recognition of its independence, initiated currency reforms between 1950 and 1951.

The FECS was scrapped on 4 January 1952, by which time the government had been able to reduce its deficit by 5.3 billion rupiah through the exchange differential.

These foreign-exchange restrictions, designed to provide the government with much-needed reserves, meant that some companies were operating at as low as 20% of capacity, due to lack of needed imported materials.

The official Rp11.4 rate, which massively overvalued the rupiah, was a major incentive to black-market traders, and also contributed to anti-Java feeling, given that those producing raw materials on the large material-rich outer islands were not receiving fair value from their goods due to the exchange rate, diverting funds to the government in Java.

Despite this, the fundamental issues with the fixed-exchange-rate system and severe import controls (which had cotton mills running at only 11% of capacity due to lack of imported raw materials) were not addressed, and smuggling grew, often backed by the army, while assets were moved offshore by over-invoicing.

The policy began to be set out in November 1966, following the reaching of agreement with Indonesia's creditors in October 1966 on debt relief and loan restructuring.

The 1966–1970 stabilisation program was a great success, resulting in higher economic growth, boosting legal exports (which grew 70% in US$ terms over the period), and increasing output (for instance the price of oil rose 250 times when the 1950 prices were abandoned, incentivising new exploration).

The M1 money supply increased sharply over the period due to lax credit controls, which[clarification needed] was channelled towards favoured groups, such as pribumi, as well as corrupt government-linked businesses.

[37] Despite the high inflation of the period, the exchange rate, which had essentially been preserved using the country's oil exports, was maintained at Rp415 until 15 November 1978.

By 1978, the combination of a fall in oil prices and a decrease in foreign reserves meant that the rupiah was devalued 33% to Rp.

The government abandoned the fixed exchange rate, and altered economic policy to a form of a managed float.

The continued overvaluation of the rupiah meant that Indonesia was beginning to suffer a trade deficit, as well as falling foreign exchange reserves.

By September 1986, the currency had been allowed to steadily fall to 1,134 rupiah, a rate which had largely maintained purchasing power over the period.

Thus, in the period from 1978 to 1986, the real exchange rate of the Indonesian rupiah fell by more than 50%, providing significant boosts to the competitiveness of Indonesia's exports.

The Asian financial crisis of 1997 began in Thailand in May 1997, where the government found it harder to maintain the Thai baht peg at ฿25 to US$1.

Indonesia, which had massive foreign reserves and was seen as having a strong economy, responded on 11 July 1997, by widening its exchange rate band from 8 to 12%.

Government debt (Bank Indonesia Certificates or SBI) rose from 12% to 30%, and overnight call rates reached 81% (per annum).

The IMF response had only been published in summary form from the government and BI, the choice of the 16 banks being closed appeared arbitrary, and the details of the 34 others subject to special measures were not announced.

The deposit guarantee was seen as inadequate, and funds were moved from private to state banks, exchanged for dollars, or transferred offshore, as confidence in the plan began to evaporate.

On 15 January, the second letter of intent was signed with the IMF, agreeing an accelerated reform package in return for US$43 billion of aid.

However, as it became clear Suharto had no intention of fulfilling the agreement, the rupiah plummeted by more than 50%, bottoming out at Rp14,800 per dollar on 23 January.

Four state and 50 private banks, representing nearly 40% of the sector, were placed under IBRA supervision in February 1998, resulting in the rupiah strengthening to 7,400 per dollar.

On 25 June 1998, the fourth letter of intent was signed with the IMF, which was refusing to provide aid due to breaches of its original agreement.

Despite the fall of the currency of about 70% from June 1997 to December 1998, inflation of 60–70% in 1998 (which caused riots and the end of the Suharto regime after 30 years in power) meant that the real exchange rate fell only slightly.

On 13 November, BI introduced new regulations requiring foreign currency purchases over US$100,000 a month to be backed by documentation of an underlying transaction and a tax number.

Subsequently, however, the cut in the Federal Reserve rate to 0–0.25% and BI support for the currency, had the rupiah strengthen slightly to a range around Rp11,000.

As of September 2018, the rupiah had fallen to its weakest position since the 1998 crisis[43] with one US dollar being worth roughly Rp14,880,[44] peaking at Rp.

[47] In present-day Indonesia, when mentioning an amount of money in everyday life, the currency name is rarely used, and instead replaced by the words "thousand", "million", and "billion".