Rupiah falls

KN. Indonesia’s rupiah hit 18,028 against the U.S. dollar, despite recent central bank efforts to provide support. The resulting pressure on trade balances has contributed to capital outflows and weaker currencies. Adding to regional uncertainty, the United States has proposed additional import duties of 10 percent or 12.5 percent on goods from 60 economies, including Indonesia, Malaysia and Singapore, over alleged forced labor failures. Permata Bank chief economist Josua Pardede said that an exchange rate of 18,000 was a “psychological threshold” for market investors.

Bank Indonesia (BI) Senior Deputy Governor Destry Damayanti said that the rupiah’s depreciation remains largely driven by global factors, particularly the impact of tensions involving the United States, Israel, and Iran. She added that domestic demand for U.S. dollars remains elevated, partly due to dividend repatriation needs and external debt repayments.

Finance Minister Purbaya Yudhi Sadewa acknowledged  that the weaker rupiah increases the government’s debt-servicing costs. However, he said the country’s fiscal position remains strong enough to absorb the impact of the currency’s decline.