The Jakarta Post
The government and House of Representatives agreed to revise the rupiah’s exchange rate assumption to 15,000 per US dollar in the 2019 state budget bill on Tuesday.
The figure is a revision of the initial projection of Rp 14,400 per dollar.
Lawmakers and government representatives also agreed on several other macroeconomic assumptions – 5.3 percent economic growth, 3.5 percent inflation rate, 5.3 percent three-month treasury bill (SPN) rate, US$70 per barrel for Indonesian Crude Price (ICP), 775,000 barrels of oil per day (bopd) of oil lifting and 1.25 million barrels of oil equivalent per day (boepd) of gas lifting.
Finance Minister Sri Mulyani Indrawati explained various financial institutions had estimated that the rupiah’s exchange rate would remain around Rp 15,000 per dollar, next year.
“Every 1 percent depreciation of the rupiah will cause inflation of 0.03 percent. With the change of rate projection from Rp 14,400 to Rp 15,000, the inflation is projected to increase from 3.49 percent to 3.56 percent. It is still in our range of target,” said Sri Mulyani during the hearing.
The minister said the 12 percent rupiah depreciation was expected to boost exports, however export performance would still face various challenges, including problems in the manufacturing industry domestically and the trade war externally.
Therefore, she estimated that export growth next year would not exceed 7 percent, instead it would be around 6.28 percent. (bbn)