Rupiah Falls to Rp16,420, BI Governor Reveals the Cause

Rupiah Anjlok ke Rp16.420, Gubernur BI Ungkap Penyebabnya

Rupiah falls to Rp16,420, BI Governor Reveals the Cause

Dream - Minister of Finance Sri Mulyani and Governor of Bank Indonesia (BI), Perry Warjiyo were summoned by President Jokowi to the Presidential Palace to discuss the plummeting rupiah, which reached the level of Rp16,420 per US$.

The meeting held on Thursday, June 20, 2024 was also attended by several other ministers and heads of institutions such as Coordinating Minister for Economic Affairs Airlangga Hartarto, Head of the OJK Commissioner Board Mahendra Siregar, Chairman of the LPS Commissioner Board Purbaya Yudhi Sadewa.

"Yes (discussion of the exchange rate of the rupiah against the dollar)," said Sri Mulyani quoted from Merdeka.com, Friday, June 21, 2024. The Governor of Bank Indonesia (BI), Perry Warjiyo, also explained that the depreciation of the rupiah exchange rate is influenced by the impact of high global market uncertainty."

Especially related to the uncertainty of the direction of the Federal Funds Rate (FFR) or interbank interest rates by the United States central bank, The Fed.

The condition has an impact on the high uncertainty of the global market due to waiting for interest rate policies by The Fed. This makes the exchange rate of the US dollar stronger compared to the currencies of developed and developing countries, including Indonesia.

"Various developments, and with the high yield of US treasury, have caused the strengthening of the exchange rate of the US dollar, thus increasing the pressure on the depreciation of various world currencies and restraining the inflow of foreign capital into developing countries."

said Perry in a press conference.

While from domestic factors, pressure on the Rupiah is also caused by the increase in foreign exchange demand by corporations, including for dividend repatriation. Then, perception towards fiscal sustainability in the future.

With this development, the exchange rate of Rupiah weakened by 5.92 percent from the end of December 2023. Apparently, this figure is lower compared to the depreciation of Korean Won, Thai Baht, Mexican Peso, Brazilian Real, and Japanese Yen, which are 6.78 percent, 6.92 percent, 7.89 percent, 10.63 percent, and 10.78 percent, respectively.

"The high uncertainty of the global financial market requires strong policy responses to mitigate the negative impact of the global uncertainty spill-over on the economies of developing countries, including Indonesia."

say Perry.

In the future, BI estimates that the exchange rate of Rupiah will remain stable in accordance with Bank Indonesia's commitment to continuously stabilize the value of the Garuda currency. This is supported by foreign capital inflows, attractive yields, low inflation, and Indonesia's sustained good economic growth.

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