Volatility hampers rupiah rate projection for 2019 state budget
The Jakarta Post
The government and the House of Representatives have not yet decided on the rupiah exchange rate assumption for the 2019 state budget, as they have to wait for the currency to stabilize amid global market pressure.
Finance Minister Sri Mulyani Indrawati said on Monday that the rupiah exchange rate projection was last corrected on Friday, namely to Rp 14,400 per US dollar, but added that the figure had not yet been approved by House Commission XI, which oversees monetary and financial affairs.
The exchange rate assumption in the 2018 state budget is Rp 13,500 per US dollar, but the currency dropped to the Rp 15,000 level last week.
“This indicates the dynamics we have to face together. We need to discuss to find a credible rupiah exchange rate but still create confidence in the calculation of the 2019 state budget,” she said, as reported by kompas.com.
She explained that several conditions would affect the rupiah exchange rate, including the normalization of the United States’ monetary policy through the federal funds rate increase and the trade war between the US and China and other trading partners.
“Because of these factors, capital inflows to developing countries are very limited. Indonesia is no exception,” she said.
In 2016 and 2017, capital inflows reached $29 billion, she said, while currently, the capital inflows were insufficient to cover the CAD. (bbn)
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