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Weaker rupiah, high oil prices hit RI manufacturing sector
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An employees shows rupiah and US dollar bank notes at Bank Mandiri Syariah, Jakarta, in this file photo.
(Antara/Nova Wahyudi)
I
ndonesian manufacturers are feeling the pinch, as a weakening rupiah exchange rate against the United States dollar and a surge in oil prices lead to higher input costs for local industry.
The rupiah has been on a downward trend in recent weeks due to uncertainty surrounding US monetary policy and geopolitical conflicts. The currency was priced between Rp 16,200 and Rp 16,300 per dollar since Tuesday after breaching Rp 16,000 per dollar at the start of the Idul Fitri holiday.
Meanwhile, international oil price benchmark Brent Crude reached a six-month high last week before settling down 3 percent on Wednesday to US$87.29 per barrel, Reuters reported on Thursday. Some analysts expect it could still rise to $90 per barrel.
Indonesian Textile Association (API) chairman Jemmy Kartiwa told The Jakarta Post on Thursday the plunging rupiah had put further pressure on an already struggling domestic textile industry amid tighter export markets and an influx of foreign goods.
"The textile industry is highly dependent on the volume of imports," Jemmy explained.
Indonesian Food and Beverage Producers Association (Gapmmi) chairman Adhi S. Lukman said on Thursday that both the exchange rate and oil prices had led to rising energy and logistics costs, which were then reflected in increased production costs.
Pressure also come from raw materials, as the industry sources most of its inputs from overseas, he explained.
