Economist: Rupiah back to around Rp16,000 per dollar not enough with BI intervention alone

Jakarta – M. Rizal Taufikurahman, head of Indef’s Centre for Macro-Economy and Finance, said that strengthening the rupiah back to the around Rp16,000 per US dollar level would not be sufficient if it relies solely on Bank Indonesia’s interventions. He argued that this effort also requires backing from a stronger fiscal stance, foreign capital inflows, exports, and market confidence in the domestic economy. Rizal, contacted by ANTARA in Jakarta on Tuesday, said the rupiah still has scope to strengthen if global pressures ease and demand for foreign currency declines. However, returning to the Rp16,000-per-dollar level would require broader support. “Regarding the projection of the rupiah returning to Rp16,200–16,800 on an annual average basis, mathematically it is still possible, but very challenging given that the current level is already above Rp17,600,” Rizal said. He also noted that current pressures on the rupiah do not originate from the real sector or export-import activities. The rupiah’s weakness is more driven by short-term outflows of foreign capital (hot money outflow) in the financial market, and seasonal factors such as dividend payments and foreign currency needs for the Hajj. Myrdal also highlighted the widening of the trade surplus amid the rupiah’s weakness. A stronger US dollar is prompting importers to curb expansion, leading to lower imports and a larger difference between exports and imports. On the other hand, he said prospects for additional foreign exchange remain open, particularly from commodity-based exports, manufacturing, downstream activities, and the tourism sector.