Impact of rupiah's depreciation

Impact of rupiah's depreciation

The fluctuating exchange rate of the rupiah against the U.S.
dollar, which has been going on since July 1997, naturally has
unfavorable impacts. For example, how this situation affects an
Indonesian student studying in the United States. If the family
is rich and a bank account is opened in the name of the student
with enough funds to cover all his expenses for the duration of
his study, then no problem would arise.

However, when the parents have to transfer funds every month
to cover expenses, then the student's parents would have a
difficult time sending enough money during a monetary crisis like
the present one. This reminds me of my friend's experience about
a decade ago. Mr. Musa (not a real name) worked as a freelance
salesman for a stationary company. His boss was of the nouveau
riche, an up-and-coming businessman, who was quite successful.

The boss sent his son to Uncle Sam's country to study.
However, the son was not smart enough to be accepted by
accredited schools. Mr. Musa, who sometimes overestimated himself
and felt himself to be second to none, also sent his son to the
United States and kept transferring his hard-earned money
monthly. One year elapsed without mishap, until on Sept. 12, 1986
the rupiah was devalued against the U.S. dollar from Rp 972 per
dollar to Rp 1,640/dollar, a sudden increase of almost 100
percent.

There was no other choice but to call his son back to
Indonesia and the son was obliged to work for his father's boss.
However, the son was quite unhappy with the turn of affairs and
it made him morose and unfriendly. It takes a lot of money to
study in Uncle Sam's country.

A. DJUANA

Jakarta