Purbaya Forecasts Rupiah Pressure to Ease in Coming Months
Finance Minister Purbaya Yudhi Sadewa forecasts that pressure on the rupiah will ease within two to three months as global geopolitical conditions improve. This optimism follows the rupiah closing 35 points higher at Rp17,881 per US dollar.
Purbaya noted that international relations, particularly between the United States, Iran, and Israel, are showing positive signals that could support global economic stability.
He stated that international media reports indicate the three countries are moving closer to an agreement that could ease geopolitical tensions.
“I believe the situation will be much better in the next two to three months compared to now,” Purbaya said in Jakarta on Sunday (31 May).
He explained that improving global conditions would remove factors that have been pressuring the rupiah’s exchange rate. With reduced external pressures, stronger domestic economic growth is expected to further bolster the national currency.
In the short term, he added, the government is continuing to strengthen coordination with Bank Indonesia to maintain financial sector stability. One measure includes participating in bond market interventions to ensure yields do not rise too sharply.
“Why are we doing this? To ensure foreign investors holding domestic bonds do not incur capital losses, which could prompt them to withdraw funds overseas,” he said.
Purbaya stressed that close coordination between the government and the central bank is key to maintaining investor confidence in Indonesia’s economy. He said that maintaining financial sector stability will help restore confidence in the rupiah.
Fiscally, he assured that the national budget remains secure despite the rupiah’s depreciation. The government, he said, has factored in currency depreciation close to current levels when drafting the budget.
“Fiscally, we have accounted for rupiah depreciation approaching current levels. Therefore, our budget remains sound even as the rupiah weakens to its present level,” said the finance minister.
Purbaya further emphasised that strengthening economic fundamentals is the main factor determining the rupiah’s direction in the long term. Therefore, the government is focused on maintaining robust economic growth in the short, medium, and long term.
“My current focus is ensuring the domestic economy continues to grow strongly in the short, medium, and long term. Ultimately, this will almost automatically strengthen the currency’s exchange rate,” he said.
He added that Indonesia remains one of the countries with the best economic growth prospects in the region and globally. This makes it attractive to foreign investors, both in foreign direct investment (FDI) and portfolio investments.
“I believe investors, particularly foreign direct investors and other foreign investors, prefer to invest in countries offering the most promising growth prospects. In this region, our economic growth is significantly faster than many other countries,” the finance minister said.
He noted that Indonesia ranks second in the G20 for economic growth after India. Therefore, he assessed that the national economic outlook remains strong and the rupiah’s depreciation has not significantly impacted domestic economic activity.