US Dollar Strengthens, Sri Mulyani Says Impact on Rupiah Is Better Than Other Countries

US dollar (Photo: dock unsplash)

JAKARTA - The weakening of the rupiah exchange rate that has occurred in the last few months is apparently the impact of the economic and political situation in the United States (US) and is being experienced by many other countries' currencies.

Minister of Finance Sri Mulyani Indrawati said that the weakening of the currency exchange rate against the US dollar was not only experienced by the rupiah but also experienced by other countries' currencies. In fact, the weakening experienced by other countries' currencies against the US dollar is worse than the weakening of the rupiah.

"The strengthening of the US dollar has significantly driven the weakening of various other countries' currencies, including the Rupiah exchange rate. The US dollar exchange rate index against major currencies (DXY) on October 27 2023 was at the level of 106.56 or strengthened 2.93 percent ytd," She said in a press conference, Friday, November 3.

Sri Mulyani said that the increase in the DXY Index put depreciating pressure on major currencies, such as the Japanese Yen and Australian Dollar which weakened 12.61 percent and 6.72 percent ytd respectively, as well as depreciation of regional currencies, such as the Malaysian Ringgit and Thai Baht respectively 7.82 percent and 4.39 percent ytd.

Meanwhile, with the stabilization steps taken by BI, the depreciation of the Rupiah exchange rate was relatively better, namely 2.34 percent ytd.

Going forward, Sri Mulyani said that steps to stabilize the Rupiah exchange rate will continue to be strengthened so that it is in line with its fundamental values ​​and supports efforts to control imported inflation.

Apart from that, other efforts also continue to be strengthened to improve market mechanisms in managing the liquidity of domestic financial institutions and attract foreign portfolio flows from abroad.

Sri Mulyani added and increased and expanded coordination in the context of implementing the instrument for placing Foreign Exchange from Natural Resources Exports (DHE SDA) in line with PP Number 36 of 2023.

"Strengthening harmonization of fiscal, monetary, and financial sector policies will also continue to be carried out to strengthen the effectiveness of the macro policy mix both in order to maintain financial system stability and to encourage accelerated economic growth," she concluded.