JAKARTA - Finance Minister Purbaya Yudhi Sadewa assessed that the current pressure on the rupiah and the stock market does not reflect the basic conditions of the Indonesian economy. He said the economic fundamentals are still strong.
Purbaya conveyed this after a limited meeting with President Prabowo Subianto at the Presidential Palace Complex, Jakarta, Friday, May 22.
During the meeting, the government heard input from a number of senior figures, including former Bank Indonesia Governor and former Bappenas officials. They shared their experiences when facing the 2007-2008 crisis and the previous period.
"I have noted it. I was ordered to study, yes we study," said Purbaya.
He denied there were concerns that the crisis would repeat itself. According to the Minister of Finance, the current conditions are very different from the 1998 crisis.
"No. Because their input is also the same, actually our fundamentals are very good," he said.
Purbaya said the weakening of the rupiah is currently in the range of 4-5 percent. This figure is much smaller than the 1998 crisis, when the rupiah weakened many times.
According to him, pressure on the exchange rate is also influenced by market perceptions.
"The economic fundamentals are very good. They also said that maybe people's perceptions are putting pressure on the exchange rate," said Purbaya.
He said Indonesia had recently received a series of pressures, ranging from MSCI, a rating agency, to exchange rate movements. However, from a fundamental point of view, he assessed that there was no problem.
"If it's from the fundamental, there is no problem. They agree," he said.
Purbaya said the government would improve the way it socializes economic achievements to the public.
"We will improve the way we can socialize our success to the public," he said.
Purbaya also responded to the JCI which moved in the range of 5,900. According to Purbaya, the movement of stock prices ultimately follows the company's fundamentals and the economy.
"If the economy is good, profitability also increases," he said.
He assessed that the company's shares that still make a profit but the price falls could be in an undervalued position, or priced lower than its fair value.
"It's impossible if the company is profitable, its shares fall. It means it's undervalued, just buy it, it will definitely be profitable," he said.
Purbaya said the government would continue to improve the economy in the future. He predicted that the JCI could strengthen again.
"If you look at the technicalities, next week it will run fast," said Purbaya.
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