A researcher at the Centre for Macroeconomics and Finance of the\nInstitute for Development of Economics and Finance (Indef), Abdul Manap\nPulungan, has assessed that the rupiah exchange rate still faces\npotential depreciation pressure amid increasingly difficult global\neconomic conditions and the relatively limited depth of the domestic\nfinancial market. As reported, the dollar to rupiah exchange rate has\nbreached Rp17,000 today.<\/p>\n
According to him, pressure on the rupiah is also reflected in\nexchange rate movements that at several banks have reached approximately\nRp17,243 per US dollar.<\/p>\n
\u201cThe rupiah will continue to face pressure. I read earlier that some\nbanks have already traded at Rp17,243. Why is this happening? It is\nbecause global economic trends are truly severe,\u201d he stated on Monday, 9\nMarch.<\/p>\n
He explained that Indonesia\u2019s relatively shallow foreign exchange\nfinancial market makes the rupiah more vulnerable to depreciation\npressure when global turbulence occurs.<\/p>\n
\u201cAmid our very shallow foreign exchange financial market, when\npressure occurs investors will easily sell rupiah and move to other\ncountries or other instruments, particularly gold which is considered a\nvery safe investment,\u201d said Pulungan.<\/p>\n
He assessed that Bank Indonesia actually has certain psychological\nthresholds for rupiah exchange rate levels deemed risky for economic\nstability.<\/p>\n
\u201cIf it reaches around Rp17,000, this could already be a warning\nsignal for Bank Indonesia because the margin against the 2026\nmacroeconomic assumption has nearly reached Rp1,000 per dollar,\u201d he\nsaid.<\/p>\n
Beyond the central bank\u2019s role in maintaining exchange rate\nstability, Pulungan believes the government must also undertake fiscal\nadjustment measures to anticipate external pressure, including the\npotential for rising global energy prices.<\/p>\n
He considered that one step that could be reviewed is reconsidering\nthe budget allocation for the Free Nutritious Meals (MBG) programme,\nwhich is assessed to absorb a large share of the 2026 fiscal budget.<\/p>\n
\u201cThe government needs to undertake fiscal restructuring, particularly\nby reviewing MBG which is one of the largest budget items in the 2026\nfiscal,\u201d he said.<\/p>\n
According to him, some of that budget could be redirected to\nstrengthen energy subsidies should global oil prices spike, so that the\nburden is not directly borne by society.<\/p>\n
\u201cIf there is a shock to oil prices, it should not immediately be\npassed on to society. There could be budget reallocation from MBG to\nsubsidies because the impact will be severe for the national economy\nwhen fuel prices rise,\u201d he said.<\/p>\n
He added that increases in fuel prices impact not only low-income\ngroups but also the middle and upper classes and the business world,\nwhich ultimately can constrain national economic growth.<\/p>\n
\u201cThe impact is not only on the lower class, but also the middle and\nupper classes. If that occurs, the national economy could be constrained\nand the growth target of around 5.4 per cent this year could be\ndifficult to achieve,\u201d Pulungan concluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/dollar-to-rupiah-breaches-rp17-000-today-indef-domestic-currency-faces-continued-depreciation-pressure-1773046311", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }