BI Provides Evidence That the Current Rupiah Situation Is Not Like the 1998 Crisis

Jakarta, CNBC Indonesia - The depreciation pressure on the rupiah against the United States dollar in recent days, which has reached around Rp 17,700 per US, doesnotmeantherupiahhasweakenedinthesamewayasduringthemonetarycrisisof1997 − 1998.BIdeputygovernorAidaSBudimanexplainedthatthecurrentrupiahdynamicsand1998werenotthesamebecausethedisparityindepreciationisnotcomparable.Atpresent, therupiahhasweakenedbyaround5.5 to Rp 17,000 per US$. ‘So it is different from 1997-1998; we moved from Rp 2,300 to Rp 17,000 suddenly and abruptly. This is what BI is safeguarding,’ Budiman said. Nevertheless, Budiman stressed that even though the weakening is lower than in 1998 in magnitude, BI is not standing still. She emphasised that BI has taken various steps to maintain stability in exchange-rate movements. ‘I am not saying this is unacceptable, but we must act—i.e., we must strive for exchange rate stability, and this is what BI is doing by ensuring stability of the exchange rate, not its level, but its stability,’ she said. BI implements this stability policy through a policy mix, using monetary policy instruments, macroprudential measures, and the payments system. ‘This is called a policy mix, with bitter medicine – a rise in the BI rate – and sweet medicine, other policies, that ensure the money in circulation is adequate,’ Budiman asserted.