The reasons why Indonesia’s economy was still stable, even though the dollar was approaching into the 1998 crisis level
CIDISS. The rupiah exchange rate against the US dollar until Friday August 31 2018 broke the highest level since the last three years. Although it continued to weaken, the condition was not like the conditions at the time of the monetary crisis that occurred in 1998.
Quoted from Reuters on Saturday, September 1, 2018, the exchange rate of the rupiah against the US dollar continued to weaken throughout August 2018. Whereas on August 1, 2018 the rupiah was at the level of Rp. 14,442 per dollar and until August 31, 2018 weakened to Rp. 14,839 per dollar.
The weakening of the rupiah against the US dollar is inseparable from a number of global external factors that have so far hit the Indonesian economy and a number of emerging market countries. The rupiah also worsened due to the large current account deficit in the country.
For this reason, the Governor of Bank Indonesia, Perry Warjiyo said that his party would continue to be in the market to intervene and maintain the forex market. In fact, in the last two days BI has purchased Government Securities (SBN). Perry explained, we buy SBN on the secondary market and BI buys up to Rp3 trillion from all that is sold by foreigners, and BI will continue to carry out financial stabilization measures and coordinate with the Financial Services Authority.
Not there, efforts to keep the economy stable amid the weakening of the rupiah were also carried out by the government. One of them is to halt the import of goods which has so far made the trade balance heavy.
One of them is implementing an expansion of diesel fuel mixed with 20 percent palm oil or known as Biodiesel 20 (B20). The effort was carried out starting today, Saturday 1 September 2018.
Perry defeated, by applying B20 on September 1, 2018, we can save our foreign exchange up to US $ 2.2 billion. These are all short-term steps to overcome the weakening of the rupiah, so that the current year current account deficit can be 2.5 percent of GDP. He also added that despite the weakening of the exchange rate, Perry ensured that Indonesia’s economic conditions remained robust and strong. Where can be seen from Indonesia’s economic growth which is still good at around five percent and August inflation remains low.
Of course, the things that continue to be observed include developments in the rupiah exchange rate, as well as its impact on economic stability, and the momentum of ongoing economic recovery. It is important to note that the weakening of the rupiah this time did not have too much effect on the Indonesian economy because macroeconomic conditions were quite stable thanks to the anticipation of Bank Indonesia by raising interest rates and maintaining the prices of basic necessities.
By: Reza Setiawan *)
