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Minister expects rupiah decline to boost exports
The rupiahâs current level supports exports and helps narrow Indonesiaâs current-account deficit, Finance Minister Bambang Brodjonegoro said, signaling the government is comfortable with the currencyâs 3 percent drop since October
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he rupiah's current level supports exports and helps narrow Indonesia's current-account deficit, Finance Minister Bambang Brodjonegoro said, signaling the government is comfortable with the currency's 3 percent drop since October.
'12,500 is already a good rate to maintain our competitiveness,' Brodjonegoro, 48, said in an interview with Bloomberg Television on Tuesday, Jan. 27. That level will also help shrink the current-account deficit, he said.
The currency is set for a third month of decline, having weakened 3.1 percent since the end of October to close at 12,477 in Jakarta on Tuesday, as the U.S. dollar strengthened against the majority of regional exchange rates. That compares with the Malaysian ringgit's 8.6 percent drop in the same period and the Philippine peso's 1.8 percent gain.
Southeast Asia's largest economy has grappled with a shortfall in the broadest measure of trade in the past three years as exports contracted in seven of the 12 months through November. The current-account deficit this year will be similar to an estimated level of about 3 percent of gross domestic product for 2014, Bank Indonesia said on Jan. 15.
The government of President Joko Widodo, who took office in October, has taken steps to reduce the risk of capital outflows this year by reforming subsidies and narrowing the budget deficit, Brodjonegoro said. The latest revised budget has a deficit assumption of 1.9 percent of GDP for 2015, from 2.4 percent last year. (***)
