Rupiah\u2019s Slide Against Regional Peers Shows Confidence Problem,\nEconomist Says<\/p>\n
Jakarta. The rupiah\u2019s weakness against not only the US dollar but\nalso regional currencies reflects declining investor confidence in\nIndonesia, according to economist Lili Yan Ing, who warned that the\nexchange rate serves as a barometer of market trust.<\/p>\n
The rupiah closed 129 points higher against the US dollar at Rp\n18,058 on Tuesday, after briefly strengthening by as much as 150 points\nfrom its previous close of Rp 18,187. The rebound was also reflected\nagainst regional currencies, with the Singapore dollar, Malaysian\nringgit, Thai baht, and South Korean won weakening 0.64%, 0.39%, 0.69%,\nand 0.45%, respectively, against the rupiah, according to Bloomberg\ndata.<\/p>\n
Lili said the rupiah\u2019s depreciation should not be viewed solely\nagainst the US dollar, but also in comparison with other major Asian\ncurrencies.<\/p>\n
\u201cThe exchange rate is about confidence. Investors and businesses are\nno longer putting their trust in the Indonesian rupiah and are choosing\nother currencies and investment destinations instead,\u201d said the\nInternational Economic Association Secretary General Lili Yan Ing on\nTuesday at Jakarta Investment Festival 2026.<\/p>\n
She described the rupiah\u2019s weakness as an \u201calarming crash\u201d and\nreiterated her long-standing view that the Rp 17,000-per-dollar level\nremains an important benchmark for assessing market confidence.<\/p>\n
\u201cSince last year, I have warned that our benchmark is Rp 17,000. Why\nRp 17,000? Because during the Asian financial crisis, the rupiah reached\naround Rp 16,800 per dollar. Many people, including those in government,\nargue that it is not a peer-to-peer comparison. But in my view, that was\nthe level of market confidence when Indonesia was facing its worst\nconditions,\u201d she said.<\/p>\n
Lili argued that comparisons should focus on relative performance\nrather than nominal exchange-rate levels. During the 1997-1998 Asian\nfinancial crisis, she noted, countries such as South Korea, Thailand,\nIndonesia, Malaysia, and the Philippines were among the hardest hit.<\/p>\n
Today, however, the rupiah has weakened not only against the US\ndollar but also against several regional currencies, including the South\nKorean won, Singapore dollar, Thai baht, and Malaysian ringgit.<\/p>\n
\u201cIf we create an index, the rupiah has also declined relative to the\nKorean won, the Singapore dollar, the Thai baht, and Malaysia\u2019s ringgit.\nWhy? As simple as that: confidence,\u201d she said.<\/p>\n
Lili said that exchange rates ultimately reflect how investors and\nbusinesses perceive a country\u2019s economic prospects relative to its\npeers.<\/p>\n
\u201cThat means investors and businesses are choosing other currencies\nand other investment destinations instead of Indonesia. That\u2019s why the\nexchange rate is a measure of confidence, and we must look at it\nrelative to other countries,\u201d she said.<\/p>\n
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