Economist: Policy credibility must be maintained for rupiah and IHSG to continue strengthening

Jakarta - The Head of the Macroeconomics and Finance Centre at the Institute for Development of Economics and Finance (INDEF), M Rizal Taufikurahman, stated that the government must maintain the credibility of its economic policies so that the strengthening of the rupiah exchange rate and the Jakarta Composite Index (IHSG) can continue. “In order for the strengthening trend of the IHSG and the rupiah to be maintained, the government needs to continue to uphold economic policy credibility through fiscal discipline, regulatory certainty, and more effective and productive state budget management,” said M Rizal Taufikurahman when contacted by ANTARA in Jakarta on Tuesday. He added that these efforts to maintain policy credibility must also be accompanied by accelerating structural reforms, increasing investment, strengthening the industrial sector, and improving people’s purchasing power. He stated this is necessary to enhance national economic productivity and competitiveness. He noted that the IHSG has the potential to return to the 8,000 level within a range of 12 to 18 months. Meanwhile, the rupiah exchange rate, in a more realistic view, is predicted to recover to around Rp16,500 per US dollar within one to two years. This projection can be realised on the assumption that global conditions become increasingly conducive, global interest rates begin to decline, and domestic economic reforms are carried out consistently. Nevertheless, he stressed that the recovery of the IHSG and the rupiah exchange rate does not only depend on market sentiment, but is also heavily determined by the government’s ability to maintain macroeconomic stability, strengthen investment, increase productivity, and build policy credibility. The rupiah exchange rate has tended to strengthen at the opening of trade each morning over the past week. On Tuesday (9/6), the rupiah opened at Rp18,134 per US dollar, then moved to Rp17,900 per US dollar on Wednesday (10/6). The rupiah rate moved to Rp17,941 per US dollar on Thursday (11/6), then strengthened again to Rp17,930 per US dollar on Friday (12/6), and continued its positive trend to Rp17,778 per US dollar on Monday (15/6). Meanwhile, the IHSG at the opening of trade over the past week was recorded at 5,344.69 on Tuesday (9/6), then 5,744.06 on Wednesday (10/6), 5,899.27 on Thursday (11/6), 5,960.27 on Friday (12/6), and then 6,118.73 on Monday (15/6).