Govt to maintain rupiah, need standby lines from China and Japan
JAKARTA - The government and Bank Indonesia will ensure the stability of the rupiah exchange rate and maintain foreign exchange liquidity to support the needs of the business world.
‘The government will also strive to keep the yield of Government Securities (SBN) stable amid the global financial market turmoil,’ the Ministry of Foreign Affairs said in a release (3/24).
The Rupiah (IDR) exchange rate on the spot market was in the high IDR16,760s per US dollar in midday trade on Thursday (3/4), weaker than yesterday (2/4). The weakening of the Rupiah took place after Donald J. Trump, President of the United States (US) implemented reciprocal tariffs that took effect on Wednesday (2/4) US time.
The value of the Rupiah was at IDR16,769/US$ in afternoon trading, weakening 0.33% from the closing of currency trading at IDR16,713 per US$ the day before. Bank Indonesia (BI) data recorded that the Rupiah transaction rate against the US $ fell in the past week. The Rupiah was at IDR16,392 per US$ on (14/3), weakening to IDR16,566 per US$ on (27/3).
According to a businessman engaged in the financial industry, the government's initiative to negotiate a 32 per cent tariff on Indonesian exports with the US government is good, but it will take time, and right now it is more important to immediately mitigate the rupiah exchange rate against the US dollar and other foreign currencies and also maintain the credit rating. ‘The JCI slipped, then the Rupiah exchange rate slipped. What is also dangerous is if our credit rating is downgraded by rating agencies such as Moody's, S&P or Fitch in June,’ he explained.
The businessman continued, ‘Tariff negotiations are good and important, but they take time. More urgent is to maintain the rupiah exchange rate.’
If the economic perception of a country is considered bad, then all economic indicators can be bad. So, he continued, President Prabowo needs to instruct the Minister of Finance, Governor of Bank Indonesia, to immediately lobby the BRICS, especially China. If Indonesia immediately opens credit lines with China and Japan, then even if the credit rating is downgraded, the Rupiah will be maintained.
Regarding SBN, the businessman explained that what needs to be safeguarded is non-resident (foreign) SBN, which amounts to IDR883 trillion or US$53 billion. ‘If we have a standby from China of around US$30 billion, we don't need to worry about Indonesia's credit rating.’
Regarding contacts with China, a source close to President Joko Widodo (when he was still in office) revealed that Jokowi had called Xi Jinping (President of China) twice. ‘Around 2020, when Covid started and the rupiah weakened, Jokowi immediately called Xi Jinping twice. And Xi Jinping's response was also positive.’ (LK/MT/LM)