Purbaya Predicts Pressure on the Rupiah to Ease in Three Months

JAKARTA - Finance Minister Purbaya Yudhi Sadewa predicts that pressure on the rupiah exchange rate will begin to ease in the next two to three months as global conditions improve and Indonesia's economic fundamentals remain strong.

According to Purbaya, a number of external factors that have been pressing the financial market, including geopolitical uncertainty, have the potential to decrease in the coming months. This condition is believed to provide room for the strengthening of the rupiah.

"If you look at various international reports, there are indications that the United States, Iran and Israel are very close to making a deal. I believe that in two or three months it will be much better than now, which means that the disturbances that have to some extent weakened the rupiah will also disappear," he said in a press conference at Wisma Danantara, Jakarta, Sunday, May 31.

Purbaya said the government remained focused on maintaining the momentum of domestic economic growth as the main foundation for exchange rate stability. He believes that a country's currency will ultimately reflect the underlying economic strength.

"Theoretically, when you have a strong economy, your currency will eventually strengthen as well, right? Now I am focused on ensuring that the domestic economy will continue to grow strongly in the medium, short, and long term. That will ultimately strengthen the currency," he said.

He assessed that Indonesia's economic prospects are still on a positive track. In fact, Indonesia is considered one of the countries with the best economic growth in the G20 group.

"We are growing much faster than many countries. Even in the G20, we are number two after India. So our economic prospects are strong and the weakening of the rupiah has not created a dampening effect on our economic activities," he said.

In addition to relying on domestic economic strength, the government is also continuing to strengthen coordination with Bank Indonesia to maintain financial sector stability. One of the steps taken is to maintain the condition of the bond market so that it does not experience turmoil that can trigger the outflow of foreign investor funds.

Purbaya explained that the stability of the bond market is important to maintain investor confidence in Indonesian financial assets, especially in the midst of global uncertainty.

"We continue to coordinate intensively with the central bank to ensure that the financial sector remains strong and stable. Why are we doing that? To ensure that foreign investors holding domestic bonds currently do not experience too deep capital losses due to market turmoil," he said.

Purbaya also ensured that the weakening of the rupiah at this time has not had a significant impact on the State Budget (APBN). According to him, the government has anticipated exchange rate movements in various macroeconomic assumptions used in budget preparation.

"In terms of the budget, we have taken into account the depreciation of the rupiah which is close to the current level. So my budget is still okay even though the rupiah weakened to the current level," said Purbaya.