Weak yuan not slowing RI's exports

The Jakarta Post, Jakarta

While a stronger yuan would help bolster Indonesia's export competitiveness, the undervalued Chinese currency has never been the main reason local manufacturers end up on the losing side against China in the global market.

"Chinese products are superior to ours, even before we speak about the value of the currency. They have relatively cheaper workers with higher productivity, so entering the market their prices are already cheaper than ours.

"Since the emergence of China, a number of factories here -- mainly producing textiles and shoes -- have felt the impact, but not as a result of the weak yuan," Fauzi Ichsan, StanChart economist, told The Jakarta Post on Wednesday.

He was responding to calls from countries around the world for China to revalue the yuan because the unit was undervalued, making manufacturing products from other countries less competitive against Chinese-made products.

The rupiah, for example, has strengthened rapidly to about Rp 8,600 against the US dollar from about Rp 10,400 two years ago.

However, Fauzi said, a stronger yuan would also result in stronger currencies around the region, including Indonesia.

"If the yuan strengthens, then there will be more confidence in (China's) economy, which will led to more confidence in Asian economies. This would provide the impetus for regional currencies to strengthen as well, including the rupiah," he said.