Economist: Government Needs to Maintain the Credibility of Economic Policies so that the Rupiah and JCI Continue to Strengthen

JAKARTA - The Head of the Center for Macroeconomics and Finance of the Institute for Development of Economics and Finance (INDEF) M Rizal Taufikurahman stated that the government needed to maintain the credibility of economic policies so that the strengthening of the rupiah exchange rate and the Composite Stock Price Index (JCI) continued.

"In order for the trend of strengthening the JCI and the rupiah to be maintained, the government needs to continue to maintain the credibility of economic policies through fiscal discipline, regulatory certainty, and more effective and productive management of the state budget," said M Rizal Taufikurahman, quoted by Antara, Wednesday, June 17.

In addition, he continued, efforts to maintain the credibility of the policy must also be accompanied by accelerating structural reforms, increasing investment, strengthening the industrial sector, and improving people's purchasing power.

He said this was needed to increase productivity and the competitiveness of the national economy.

"Strengthening the sustainable financial market can only be achieved if it is supported by increasingly strong economic fundamentals and increased investor confidence in Indonesia's economic prospects," said Rizal.

He said, the JCI has the potential to return to the level of 8,000 in the range of 12-18 months. Meanwhile, the rupiah exchange rate, in a more realistic view, is predicted to recover to the range of Rp16,500 per US dollar within 1-2 years.

The projection can be realized with the assumption that global conditions are increasingly conducive, global interest rates begin to decline, and domestic economic reforms run consistently.

However, he emphasized that the recovery of the JCI and the rupiah exchange rate not only depends on market sentiment, but is also strongly determined by the government's ability to maintain macroeconomic stability, strengthen investment, increase productivity, and build policy credibility.

"So that the strengthening of the financial market can take place more sustainably and become the foundation for quality economic growth," said Rizal.

The rupiah exchange rate tends to strengthen at the opening of trading every morning in the last week. Last Tuesday, June 9, the rupiah opened at Rp18,134 per US dollar, then became Rp17,900 per US dollar on Wednesday, June 10.

The rupiah exchange rate moved to the level of Rp17,941 per US dollar on Thursday, June 11, then strengthened again to Rp17,930 per US dollar on Friday, June 12, and continued the positive trend to the level of Rp17,778 per US dollar on Monday, June 15.

Meanwhile, the JCI at the opening of trading over the past week was recorded at 5,344.69 on Tuesday, June 9 to 5,744.06 on Wednesday, June 10, 5,899.27 on Thursday, June 11, 5,960.27 on Friday, June 12, and then 6,118.73 on Monday, June 15.