Economist: Synergy Among Institutions Crucial for Rupiah Exchange Rate Stabilisation

Bandung (ANTARA) - Economist and Associate Faculty at LPPI Ryan Kiryanto stated that efforts to stabilise the rupiah’s exchange rate cannot rely solely on Bank Indonesia (BI), but require synergy with other authorities to maintain overall economic stability.

This was conveyed by Ryan in response to the rupiah’s weakening this week, which breached the Rp17,300 per US dollar level due to escalating global geopolitical tensions increasing economic uncertainty.

“In stabilising the rupiah, BI cannot work alone. So BI has already done what is its job, and other authorities need to do their jobs,” said Ryan during a media discussion in Bandung, West Java, on Saturday.

According to him, several micro strategies are already in place, but collaborative and cross-sectoral strengthening is needed. Some of the strategies already underway include adjusting the threshold for purchasing US dollar foreign exchange against the rupiah in banking.

Ryan also encouraged structural improvements to the domestic economy, including increasing the use of import substitute raw materials, such as in the pharmaceutical industry. This can reduce foreign exchange demand, thereby easing pressure on the rupiah.

The role of the Financial System Stability Committee (KSSK) also needs to be strengthened through policy harmonisation among authorities, according to Ryan. This is so that the KSSK can produce policies with a more market- and investor-friendly tone.

The rupiah exchange rate closed at Rp17,229 per US dollar at the end of trading on Friday (24/4). The previous day, on Thursday (23/4), the rupiah weakened, breaching Rp17,304 per US dollar, the weakest level for the Garuda currency to date.

“Our state budget assumption is the equilibrium point, which we need to gradually direct. Of course, there is a basis for this; perhaps when setting the exchange rate at that level, it was a figure that could please both exporters and importers,” he said.

With the escalation of global geopolitical tensions impacting volatility in oil and commodity prices, Ryan views the risks to Indonesia’s economy as increasingly elevated.

These risks will transmit to trade, finance, and investment. Therefore, the room for BI to lower interest rates in the future, he said, is becoming increasingly limited.