Purbaya: Rupiah at Rp 18,000 Has Not Yet Disrupted Government's Debt Repayment Capacity

Finance Minister Purbaya Yudhi Sadewa has said the rupiah exchange rate breaching the Rp 18,000 level has not yet disrupted the government’s ability to pay its debts. Speaking to reporters at the Parliament Complex in Jakarta on Thursday, Purbaya explained that government bond coupons are fixed, meaning exchange rate fluctuations do not significantly affect them. However, he acknowledged the rupiah’s depreciation does impact interest payments on government debt denominated in foreign currencies. Purbaya noted that the current rupiah movement is still within the government’s calculation range. “The coupons are constant. Debt repayments are made through coupons. It is just that when the rupiah weakens, it increases the rupiah value of the payments,” Purbaya said. The government has set an exchange rate assumption of Rp 16,500 per US dollar in the State Budget. During the period when fuel prices surged due to geopolitical conflict, the ministry conducted simulations on the exchange rate. He did not detail the simulation scenarios that were run. Purbaya stated that the rupiah’s fundamentals remain below the current level of Rp 18,000 per US dollar. “Fundamentally, the rupiah is below the current level. It is stronger than it is now,” he said. Separately, Bank Indonesia has confirmed it will continue to intervene in the foreign exchange market with higher intensity amid the rupiah’s ongoing depreciation to the Rp 18,000 range against the US dollar. Senior Deputy Governor Destry Damayanti said the central bank is also strengthening the interest rate structure of pro-market monetary instruments to keep attracting capital inflows into domestic asset instruments. Destry emphasised that sustained intervention will be carried out consistently through Non-Deliverable Forward transactions in the offshore market, spot and Domestic Non-Deliverable Forward transactions in the domestic market, accompanied by purchases of government securities in the secondary market.