JAKARTA - Finance Minister Purbaya Yudhi Sadewa assessed that the weakening of the rupiah exchange rate was still within a reasonable range and had not provided significant pressure on the national economy.
"If the rupiah weakens, if you look at the percentage, it is a little compared to the previous level. So the system should be used to it. So to wholesale, the impact on the economy is likely to be minimal," he told the media, Tuesday, January 20.
He emphasized that the fundamentals of the Indonesian economy continue to show improvement where domestic economic activity increases and investor confidence remains maintained, which is reflected in the strong performance of the capital market even though the exchange rate is under pressure.
"But the important thing is that when our economic foundation is improved, domestic economic activity will increase. People will see that the economy is good, investors will come back here, including foreign investors," he said.
Purbaya explained that the strengthening of the stock market was an indication of the inflow of capital, both from domestic and foreign investors and this condition was considered not in line if the rupiah experienced prolonged pressure.
"You see in the capital market it is rising. The capital market cannot rise if there are no foreign investors or domestic investors who enter here," he explained.
In terms of foreign exchange supply, Purbaya assessed that there were no indications of a shortage of US dollars, so the weakening of the rupiah was more temporary and did not reflect the fundamental conditions of the economy.
However, he emphasized that the exchange rate policy was entirely the responsibility of the central bank.
"So, if you look at the supply of dollars, there should be no shortage, you should just ask the Central Bank what the policy is, I don't know," he said.
He also appealed to market participants not to make excessive speculation amid exchange rate movements which he considered did not fully reflect economic fundamentals.
According to him, as long as the economic foundation continues to be maintained and strengthened, the rupiah has the tendency to strengthen again.
"So for speculators, don't take positions that are too long, long is to buy in advance. It's estimated that our economic foundation will not be disrupted, it will continue to improve," he said.
Furthermore, Purbaya said that policy coordination between authorities continued to be strengthened through the Financial System Stability Committee (KSSK), which involved the government, central bank, Financial Services Authority (OJK), and Deposit Insurance Corporation (LPS).
He added that the synergy of the policy is expected to mobilize the entire economic engine, both the government and private sectors, to encourage faster economic growth.
"So the economic engines with synergistic policies between us, the Central Bank, OJK, and LPS, should be our economic engines will move all. The government, the private sector, will encourage economic growth to a faster level," he explained.
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