Strengthening the Rupiah through Fiscal and Monetary Synchronisation

Finance Minister Purbaya Yudhi Sadewa believes that strengthening the synchronisation of fiscal and monetary policies can restore market confidence in the national economy and drive the appreciation of the rupiah exchange rate. During a press conference in Jakarta on Saturday (6/6), Purbaya stated that strong synergy between fiscal and monetary authorities is a crucial factor in maintaining economic stability while providing tangible benefits to the wider public at both macro and micro levels.

The intended synchronisation involves increasing the attractiveness of domestic financial instrument yields to encourage foreign capital inflows. It also involves maintaining adequate liquidity in the money market and banking sector by ensuring government cash remains deposited at Bank Indonesia, accompanied by an increase in the remuneration paid by BI to the government.

“Full synergy should restore market confidence in the rupiah exchange rate, so that the rupiah will increase significantly and not weaken further, reaching a higher level than it is now,” said Purbaya. He emphasised that the primary goal of strengthening policy coordination is not merely to maintain exchange rate stability, but to ensure that the positive impacts are felt directly by the community.

Purbaya noted that the weakening of the rupiah has previously pressured small business owners who rely on imported raw materials. This condition leads to increased production costs, which ultimately impacts product prices for consumers. “I hear that tempeh and tofu sellers have seen their profits eroded or have been forced to raise prices because their raw materials are still imported. Clearly, this increases their cost of production,” he said.

He expressed optimism that with more coordinated and effective policies, the stability of the rupiah exchange rate will be better maintained. Consequently, production cost pressures could decrease, making the prices of various public necessities more controlled. “With better policies, we will see a more stable rupiah, so that tempeh traders and housewives can also experience better prices and are not burdened by a significant increase in the cost of living,” Purbaya added.

Finance Minister Purbaya Yudhi Sadewa reaffirmed that Indonesia’s current economic condition remains stable and is not heading towards a monetary crisis similar to 1997-1998. Meanwhile, Governor of Bank Indonesia, Perry Warjiyo, emphasised that the central bank is conducting interventions in the financial market to maintain the stability of the rupiah exchange rate amidst global uncertainty.