Jakarta, PINUS PRESS – Two decades ago, in the 1990s to be precise, Indonesia was hit by a severe monetary crisis which has caused huge inflation at the rate of 77.6%. Indonesian Rupiah has weakened to the concerning rate of IDR 14,885 per U.S. Dollar. The Indonesian currency is at its lowest point since the monetary crisis in the 1990s. Taking the pressures affecting the depreciation into consideration, the weakening is going to continue in the near future.
Even though the inflation was insignificant compared to the preceding monetary crisis of the 1990s, the weakening has caused concerns. Investors in Indonesia are starting to chase U.S. Dollar as the safety measure to anticipate the further weakening of the Indonesian currency.
The crisis should have not been the case considering the huge benefit obtained from hosting this year’s Asian Games which had attracted many opportunities that could also improve Indonesia’s economy. The games were expected to benefit Indonesia by approximately $2.8 billion.
However, Indonesian Coordinating Economic Minister Darmin Nasution said that the weakening was caused by external factors, which are the markdown of Argentina’s economy, which also affect other Southeast-Asian countries’ currency. “There is no internal pressure,” he added. Furthermore, other external pressure to cause the deficit is U.S President Donald Trump’s economic programs, including the trade war.
Despite the depreciation, Mirza Adityaswara, Senior Deputy Governor of Bank Indonesia, emboldened that Indonesia’s economy at the moment is relatively stable and healthy.
Bank Indonesia has taken measure to counter the deficit by buying $204 million worth of government bonds as the intervention in the foreign exchange and bond markets.
WRITER: NATHANAEL SEPTIANTO PRATAMA
Pinus Press 