Economists Suggest Strategic Steps To Strengthen Rupiah Exchange Rate

JAKARTA - Head Center of Macroeconomics and Finance Indef M Rizal Taufikurahman provides suggestions in the form of strategic steps that stakeholders need to strengthen in order to strengthen the rupiah exchange rate.

"In the future, there are several strategic steps that need to be strengthened to strengthen the rupiah exchange rate," said Rizal, quoted by Antara, Tuesday, February 4.

He reminded that the government plays a role in maintaining rupiah stability by controlling the current account deficit, encouraging exports, and reducing dependence on imports.

According to him, export diversification is the key to reducing dependence on traditional markets, while controlling imports of consumer goods that are not essential can help reduce the current account deficit.

In addition, increasing foreign direct investment (FDI) also needs to be encouraged by creating a conducive investment climate, accompanied by efforts to maintain political stability and legal certainty to increase investor confidence.

"With the implementation of the right policy and solid coordination between Bank Indonesia (BI) and the government, it is hoped that the volatility of the rupiah can be controlled, and the opportunity to strengthen the exchange rate remains open in 2025," said Rizal.

The rupiah exchange rate against the United States (US) dollar showed a significant weakening trend, which was in the range of Rp. 16,300 per US dollar in early February 2025.

The pressure is in line with the strengthening of the US dollar index (DXY) which moves at the 108 level to close to 110.

Most recently on Tuesday, the rupiah exchange rate was still moving in the range of Rp. 16,300.

The rupiah was at the level of IDR 16,351 per US dollar at the close of trading Tuesday, strengthening to 97 points or 0.59 percent from the previous IDR 16,448 per US dollar.

Meanwhile, based on data from Jakarta Interbank Spot Dollar Rate (JISDOR) BI on Tuesday, the rupiah was at the level of Rp. 16,365 per US dollar from the previous Rp. 16,453 per US dollar.

Rizal said that future projections show quite high uncertainty.

He estimates that the rupiah will remain under pressure above Rp. 16,300 throughout 2025.

He explained that global factors that influence rupiah performance include strict monetary policy in the United States, strengthening the US dollar, global economic uncertainty, and geopolitical dynamics that encourage investors to switch to safe haven assets.

In dealing with this pressure, Rizal views that BI has implemented a number of strategic steps to maintain exchange rate stability.

However, he also said, BI should intervene doublely in foreign exchange markets (foreign exchange) and the Government Securities (SBN) market to reduce volatility.

In addition, it also ensures the availability of foreign exchange liquidity through swap facilities at competitive prices.