Rupiah Breaches 18,000 per US Dollar, Purbaya Assures it Will Not Disrupt Government Debt Payments

Finance Minister Purbaya Yudhi Sadewa has stated that the rupiah exchange rate breaching the Rp18,000 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 the coupons on government bonds are fixed rate, meaning exchange rate fluctuations have little effect. However, he acknowledged that the weakening of the rupiah does impact interest payments on government debt denominated in foreign currency. Purbaya noted that the current rupiah movement remains within the government’s calculated range. “The coupons are constant. Debt payments are made via these coupons. However, when the rupiah weakens, payments increase in rupiah terms,” Purbaya said. The government set a rupiah exchange rate assumption of Rp16,500 per US dollar in the State Budget (APBN). When fuel prices soared due to geopolitical conflicts, simulations regarding the exchange rate were conducted. He did not detail the simulation schemes, but stated that fundamentally, the rupiah should be below the current level of Rp18,000 per US dollar. “Fundamentally, the rupiah is below the current level. It is stronger than it is now,” he stated. Separately, Bank Indonesia (BI) confirmed it will continue to intervene in the foreign exchange market with higher intensity amidst the ongoing rupiah weakening to the Rp18,000 level against the US dollar. BI Senior Deputy Governor Destry Damayanti said the central bank is also strengthening the interest rate structure of pro-market monetary instruments to continue attracting capital inflows into domestic asset instruments. “Consistent and sustainable intervention will continue through Non-Deliverable Forward (NDF) transactions in the offshore market, spot and Domestic Non-Deliverable Forward (DNDF) transactions in the domestic market, accompanied by purchases of Government Securities (SBN) in the secondary market,” Destry asserted.