Why is the rupiah weakening?

Why is the rupiah weakening?

From Warta Kota

Both economic players and ordinary people are seized with
worry about the weakening rupiah. There is fear that the exchange
rate of the rupiah will continue to drop against the U.S. dollar
so that the price of daily commodities will likewise
uncontrollably soar, as before.

This phenomenon is attributable to many causes, such as
security, politics and the law. The latest example is the
temporary closure of the Arun gas plant (in Aceh) because of poor
security in the area. As a result, the government will sustain
big losses because this export commodity is directly related to
the government's U.S. dollar income.

Politics is obviously a factor causing the rupiah to weaken
because it has to do with a number of government policies,
including those in the economic and monetary areas. In the legal
area, which should actually serve as the basis for security and
politics, for example, President Abdurrahman "Gus Dur" Wahid
allowed the flag of the separatist Free Papua Organization (OPM)
and secessionist Free Aceh Movement (GAM) to be hoisted.

This decision made the security forces confused when having to
deal with growing demands for independence in these regions. On
the one hand, the security forces are accused of not being
responsive and quick enough, while on the other, they are accused
of violating human rights when they deal with insurrection in
accordance with their institutional procedures.

The absence of legal certainty in the present transitional era
has put people in an awkward position. So, now that GAM has been
officially called separatist and has to be dealt with in
accordance with the standing procedure, in other regions
secessionist aspirations will be dampened.

The three factors referred to above greatly affect economic
and monetary stability and are specially linked to the
fluctuation of the rupiah. In this case, government regulation
No. 1/1982, which has benefited speculators, is also an important
factor.

Our rupiah has also weakened because the community has lost
its confidence in the government as new crucial problems have
continued to crop up. If this is the case, how can we expect the
outside world to have confidence in our country despite the fact
that Gus Dur has traveled round the world, purportedly promoting
the country?

H. ASJARI

Depok, West Java