The exchange value of the Indonesian Rupiah against the US Dollar continues to weaken. On Monday August 19, 2013, the rate-of-exchange touched Rp. 10,645 to the greenback.
Quoted by The Bali Post, economist Riza Ramli said: “I think it is just a matter of time. The rupiah will touch Rp. 11,000 to the dollar. The reason? The Market was very disappointed with President Yudhoyono’s (recent) speech on the economy.”
Moving steadily toward the predicted level of Rp. 11,000, the rate on Sunday, August 25, 2013 stood at Rp. 10,921 to the dollar.
According to the former Coordinating Minister for the Economy during the presidency of Abdurrahman Wahid, the market viewed President Yudhoyono’s comments on the economy as very unrealistic and failing to provide answers on the steps that must be taken in order that macro-indicators on the Indonesian economy can improve.
Riza Ramli predicts that the value of the Indonesian Rupiah will continue to deteriorate due to a number of factors, including a trade deficit for the quarter approaching US$ 6 billion dollars, and a deficit in the balance of payments of between US$6.3 –US$6.5 billion. Riza also said the decline in the rupiah will also make the cost of imported fuel more expensive, adding additional cost to the State Budget.
Unfortunately, according to Riza, the added burden to the National Budget comes at a time when some US$27 billion in private sector debt also falls due. Describing the worsening situation ahead, the former cabinet minister predicts food prices will also soon increase.
Riza expressed disappointment, saying that the monetary condition of Indonesia is substantially different from 2008 when the economic fundamentals were substantially sounder.
“(At that time) the balance of trade and the balance of payments were both in surplus, minimizing the effects of the U.S. recession on Indonesia,” said Rizal.
In his economic address just the week before, President Yudhoyono spoke of the weak position of the Indonesian Rupiah against the U.S. Dollars. The President insisted any weakness in the Rupiah was less severe when compared with other Asian countries’ currencies – such as Australia, Malaysia, Philippines, South Korea and Japan.
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