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DEN warns of rupiah risks from more US protectionism
Ahead of a second presidential term for president-elect Donald Trump in the United States, Luhut Pandjaitan’s National Economic Council (DEN) has advised the government to “play smart” in its dealings with the world’s largest economy to prevent a strong reaction.
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Tech billionaire Elon Musk (left) walks with Luhut Pandjaitan, who at the time served as coordinating maritime affairs and investment minister, after his arrival at Bali's I Gusti Ngurah Rai International Airport on May 19, 2024. (AFP/Sonny Tumbelaka)
T
he government must be vigilant about the impacts of a possible increase in protectionist policies in the United States under Donald Trump, which could pile pressure on the rupiah, National Economic Council (DEN) head Luhut Pandjaitan has warned.
“The impact we [expect] from Trump’s second presidential term is a slowing down of global economic growth and inflation that will be higher. We worry that the US dollar will be stronger and impact our rupiah,” Luhut said on Monday, as quoted by news agency Antara.
Luhut also pointed to Trump’s initiative to create a Department of Government Efficiency led by tech industry magnate Elon Musk, aimed at slashing the US federal budget by up to US$2 trillion.
He stressed the need for Indonesia to anticipate these changes by “playing smart” in its dealings with the US. “From what I understand about [Trump], he’s pragmatic. Any action that threatens his interests could prompt a strong reaction,” Luhut warned.
Read also: BI keeps interest rate unchanged to stabilize rupiah
In an interview with CNBC Indonesia on Monday, Luhut outlined two major policies from the US president-elect that could significantly impact Indonesia, which were the imposition of higher tariffs and his intention to categorize countries based on their alignment with US interests.
On Monday, Trump threatened to impose a hefty tariff on BRICS, a group of emerging economies that include Brazil, Russia, India, China, South Africa and others, should they undermine the US dollar.
