Public anxiety would undermine efforts by the government and the central bank to curb rupiah depreciation against the United States dollar, said Iskandar Simorangkir, the deputy for macroeconomics and finance at the Office of the Coordinating Economic Minister.

He emphasized that, even though the rupiah had fallen to its weakest position since the 1998 financial crisis at Rp 15,000 before bouncing back to Rp 14,800, other economic aspects were not as bad as they were during the previous economic crisis.

For example, although the country’s current account deficit (CAD) expanded to three percent against the GDP by the second quarter of 2018, it was worse off in the same period four years ago when the CAD reached more than four percent.

“If people are saying we are about to enter a [financial] crisis, I suggest that we look at the historical fact that when we have high economic growth, our CAD becomes pressured,” Iskandar said at a recent discussion. “However, it is caused by capital inflow, so it is not a problem.”

He added that it was irrelevant to say that Indonesia had weak economic fundamentals given the country recorded its highest economic growth since 2014 at 5.27 percent in the second quarter.

To mitigate the effects of the depreciation, Bank Indonesia (BI) intervened in the market by spending its US dollars and subsequently lowering its foreign exchange reserves to US$117.9 billion in August from $118.3 billion in July and $119.8 billion in June.

BI executive director for the international department Doddy Zulverdi, meanwhile, said stakeholders should not be fixated on measuring the rupiah’s “psychological level” in the money market, adding that people should look at the pace at which the rupiah weakened, rather than its value.

He criticized speculators for outlining worst-case scenarios of the situation, saying that all it had done was spread uncertainty, despite the many efforts being made to overcome the weakening rupiah.

“The situation we are facing remains uncertain and there is nothing wrong with being alert,” Doddy said on the same occasion. “However, everyone should keep in mind that all related authorities — the government, BI and the Financial Services Authority (OJK) — are not sleeping on this situation. We will keep coordinating so that steps to stabilize [the rupiah] can go on.”

Robert Leonard Marbun, an expert staff member on state revenues at the Finance Ministry, said the government was looking forward to seeing the results of its recent policies to curb rupiah depreciation, such as its 20 percent blended biodiesel (B20) policy and increase in taxes for imported consumer goods.

Earlier in August, President Joko “Jokowi” Widodo signed Presidential Regulation No. 66/2018, which requires the expansion of B20 to domestic sectors outside of public services by Sept. 1.

Jokowi and his administration have repeatedly expressed confidence over the new regulation, saying it would save the government $5.9 billion in oil and gas imports a year.

Finance Minister Sri Mulyani Indrawati issued on Sept. 5 Finance Ministerial Regulation No. 110/2018 on additional taxes of 2.5 to 10 percent on 1,147 imported consumer goods.

The regulation, which aims to promote local alternatives and encourage growth in the domestic manufacturing industry, went into effect this week.

“It should be noted that those regulations are not made for the sake of the state revenue, but rather as part of a policy series that can reduce [rupiah depreciation],” Robert said.

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