JCI Sets Record as Rupiah is Depressed, Purbaya: There is Something Strange, Ask BI

JAKARTA - Minister of Finance Purbaya Yudhi Sadewa spoke out regarding the difference in movement between the Composite Stock Price Index (JCI) which recorded a record high and the rupiah exchange rate which is still depressed.

According to him, the JCI has an important role as a signal for investors and business actors, both at home and abroad, that there are positive developments in the Indonesian economy.

"So if some people say the JCI is useless for us, but the JCI is a signal to investors and business actors throughout Indonesia abroad that there are positive developments here," he told the media, Tuesday, January 20.

He assessed that this condition encourages investors to pay attention to investment opportunities, even some have begun to realize their investment plans.

"So they are looking and some of them have entered to implement their investment policies. So our prospects will be good," he said.

However, Purbaya admitted that he had his own assessment, and suggested that the question be directed to the central bank.

"I have it but I can't talk. You ask the Central Bank what happened," he said.

"The rupiah will gradually strengthen. There is no reason for the rupiah to weaken when capital comes here. Yes? What do you think? That's why there is something strange, right? You ask the Central Bank," he added.

On an annual basis, Purbaya said the weakening of the rupiah was still in the range of 2-3 percent and was considered still manageable by the business world, including importers.

According to him, the increase in costs due to the weakening is still within the limits that can be controlled.

He emphasized that the current fundamental direction of the economy is actually opposite to the exchange rate movement and when the economic foundation continues to improve, the rupiah is still experiencing weakening.

According to him, this condition can actually be an attraction for investors, because in addition to the potential for profit from the capital market, they also have the opportunity to gain exchange rate gains when the rupiah moves back in line with its fundamentals.

"Maybe some people are afraid, but I think that from the market it is very clear that they believe our economic foundation is good, and maybe it will get weaker as they enter, why? He can get it from capital gains and forex gains later when the economy or rupiah moves in line with its fundamentals," he said.

Purbaya even assessed that the current rupiah exchange rate is relatively weaker than the actual economic fundamentals.

"So compared to the fundamentals now the rupiah is too weak. But you ask the Central Bank, then I will be lured into it again. Pinter nih, he keeps fishing. Later I will let go, there will be another storm outside," he said.

However, he reiterated that further explanation regarding the dynamics of the exchange rate is the authority of the central bank.

"If I know the reason, I know very well why and I will fix it in two days, two nights last night. But I'm not the Central Bank. Just say it's wrong," he explained.

Meanwhile, from the fiscal side, including the impact on energy subsidies, Purbaya ensured that the pressure was still under control.

He added that this was because the movement of exchange rates and global oil prices was still around the assumptions set in the State Budget (APBN).

"Yes, we just pay. How much the dollar goes up, it's not much different from our assumption of the state budget, and the price of oil is below the state budget assumption. So this subsidy is relatively controlled so far," he said.