Tourists flock to Indonesia, lured by a cheaper rupiah

Teresa Goh I CNBC Asia
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Ellie Cowen, a 23-year old Australian university graduate, returned from a trip to Bali, Indonesia, last month, and is already planning to return before year end, lured back by the nation's weakening currency.

"My original plans were to visit my boyfriend in Europe," Cowen told CNBC. "[But] after much debate, we decided that we will meet up in Indonesia instead as it might simply be the cheaper alternative. I think the weak rupiah is hugely inviting."

The rupiah has taken a battering this year amid fears of a winding down of the U.S. Federal Reserve's stimulus program, declining over 19 percent against the U.S. dollar.

(Read more: Why the rupiah can't recover from the emerging market rout)

Countries with high current account deficits like India and Indonesia were hit particularly hard, and the rupiah's rout has continued despite repeated efforts by its central bank to shore up losses in the currency, including raising interest rates by 150 basis points since June.

How to play a weaker Indonesian rupiah

Cowen is just one of a growing group of tourists that have been lured to Indonesia in recent months amid rapid declines in the nation's domestic currency.

BPS Statistics Indonesia, a government bureau, reported last week that tourist visits to Indonesia jumped over 21 percent in August from a year earlier. Additionally, a report from, an online accommodations booking site, has shown that visitors in Indonesia are paying around 14 percent less for their accommodations this year as compared to last.

Experts that CNBC spoke to said the rupiah was helping to drive the recent boom.

"The weakening rupiah is a contributing factor to the increase in tourism," said Ellyana Fuad, president director at PT Visa Worldwide Indonesia.

However, she said it was important to recognize that there were many other reasons why people would want to visit the country.

(Read more: Indonesia's rate hike best for the medium term)

"Indonesia is extremely accessible, and with the increase in low cost carriers that do direct flights, it makes the destination attractive. We have seen a lot of younger travelers, and they tend to prefer short, budget friendly weekend trips, and Indonesia is perfect for that," she said.

James Mellor, a 38-year old U.K. expat living in Singapore, told CNBC that currency was an important driver in deciding where he would like to travel in South East Asia.

"To be honest, if I'm planning a holiday and there are many opportunities to visit some nice places around the region, good financial advantage is alluring," he said.

When CNBC asked Mellor if the weak rupiah would be a reason why he would return to Indonesia, he said "yes definitely, along with the fact that you want to explore and experience new culture... but definitely it's much more attractive with the weaker rupiah."

(Read more: Rupee slump buzz kill for Indian tourists)

However, a representative at a Singapore-based travel agency said he didn't think the recent rise in tourist enquiries about holidays to Indonesia was driven by a weaker rupiah. Instead, he attributed the rise to the number of public holidays falling on weekdays this August compared to last.

The rupiah is currently trading at 11,535 to the U.S. dollar.

By CNBC's Teresa Goh.