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Rupiah surge spells headache for exporters
The rupiah had strengthened to nearly Rp 15,600 by noon on Thursday, bringing positive impacts for importers and investors, while experts recommend exporters to implement strategies to dampen the negative effects of a stronger currency.
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A freight truck hauls a container on Dec. 18, 2018 at Tanjung Priok Port in North Jakarta. (Antara/Sigid Kurniawan)
T
he rupiah has strengthened against the United States dollar since it hit an all-time low in mid-June, returning to levels last recorded at the beginning of the year.
While the latest appreciation of the national currency brings with it positive impacts, such as lower import costs, a reduced debt burden and a potential increase in foreign investment, it also spells a headache for export-oriented Indonesian companies, which are suddenly finding their products less competitive in the global market.
Business associations have warned that a stronger rupiah could lead to a drop in exports or lower profit margins after export proceeds are converted, while economists have encouraged companies to mitigate that effect through hedging, expanding target markets and boosting operational efficiency.
In June, the rupiah dropped to its lowest level of around Rp 16,500, which experts attributed to the Fed signaling its intent to keep interest rates high and for longer than previously expected.
Concerns over the fiscal policies of the incoming administration as well as the rising tension between Iran and Israel are also believed to have contributed to the rupiah’s depreciation in the first half of 2024.
Bank Indonesia hiked its benchmark interest rate in April to counter the trend and prevent further damage.
Over the past two months, the currency has bounced back to around Rp 15,500 per dollar, close to the level recorded in January, though it was treading near Rp 15,600 around midday on Thursday.
