Joko Widodo (kompas.com) 

Indonesian President Joko '€œJokowi'€ Widodo says that people should not be too concerned about the weakening of the rupiah as it is still manageable and the government, together with the central bank, will be able to keep the economy stable.

Speaking before the Indonesian diaspora in Doha Qatar on Monday night, President Jokowi said that the depreciation of the rupiah had been largely caused by external factors, such as the strengthening of the US economy and the slowing of China'€™s economic growth, and added that local markets had also been jittery, awaiting a decision from the US Federal Reserve about increasing its interest rate.

The President also asserted that the fall of the rupiah was caused by a significant volume of imports, of things like consumer goods and electronics, adding that many Indonesians were import lovers.

'€œIf we could reduce imports then the rupiah wouldn'€™t be as weak as it is today,'€ President Jokowi said in a press release received by kompas.com.

He reminded people that the current depreciation of the rupiah had happened gradually over the past four years, as opposed to the dramatic drops in the currency'€™s value during recent crises; by 572 percent in 1998 and by 38 percent in 2008 in only three months.

President Jokowi emphasized the importance of a shift from consumption to production in order to strengthen the production of various commodities, such as rice, soybeans, onions, corn, sugar and meat.

'€œI ordered the minister of agriculture to address problems involving rice, corn and soybeans within 3 years, sugar within 5 years and meat concern in around 5 years,'€ Jokowi said.

He added that people should panic less because Indonesia'€™s macro-economy and its state budget'€™s fiscal room-to-move have started to improve.

The Fed decision

Capital market analysts agree with the government that one of the reasons for Indonesia'€™s economic uncertainty has been the US Federal Reserve (Fed) delaying its decision to adjust its interest rates benchmark.

'€œYes, we are forced to agree that it'€™s because of the Fed,'€ Satrio Utomo, analyst from Universal Broker, told thejakartapost.com.

Indonesia'€™s finance minister, Bambang Brodjonegoro, has predicted that the ongoing global economic fluctuations will continue until the US Fed makes a decision.

'€œWhat'€™s really causing the turmoil is uncertainty,'€ he said.

Satrio said that the market was waiting for the outcome of the Federal Reserve's meeting on September 16 and 17, which will deal with the future of the quantitative easing program as the rupiah continued to weaken and foreign investors were again mostly selling their Indonesian assets.

'€œI agree with President Jokowi that we should calm down in the current situation but at the same time we don'€™t have to be over confident,'€ he said.

Satrio said he was optimistic the rupiah and the capital market would gradually return to normal after the US central bank made it decision. (DK)

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