Irony! The Rupiah Is Not Fine, Not “Impressive” in the Midst of Soaring Export Values

Jakarta – RUPIAH continues to burn. Foreign exchange reserves are also getting depleted. The rupiah has had bad luck at least in the medium-short term. Indonesia’s pride currency will “suffer” against the United States (US) dollar – which continues to raise interest rates. The US dollar continued to strengthen, not only against the rupiah, but also against almost all world currencies. However, the rupiah is expected to continue to suffer.

The rupiah exchange rate was surrounded by negative sentiment. The rupiah has been “beat” throughout this year. During this year, the rupiah has “melted” by 9.28%. On October 24, 2022, the rupiah was at the level of IDR 15,586 per US dollar, and even earlier (21/10) the rupiah had slumped to IDR 15,632 per US dollar. This is the lowest price for the rupiah on the spot market since April 17, 2020. The movement of the rupiah makes people’s hearts flutter. At the end of October 2022, the rupiah stood at IDR 15,595 per US dollar. People’s expectations seem to be reaching IDR 16,000 by the end of this year.

Even more “nervous”, foreign exchange reserves also continue to erode. Since the beginning of the year (January 2022) foreign exchange reserves have stood at US$141.3 billion. Now, as of September 2022, foreign exchange reserves have shrunk to US$130.8 billion. The highest record of foreign exchange reserves occurred in September 2021 with a figure of US $ 146.9 billion. So, this year, foreign exchange reserves have been deflated by 11.39%.

On the other hand, cumulatively, the value of Indonesia’s exports (January-September 2022) reached US$219.35 billion, up 33.49% compared to the same period in 2021. The Ukraine-Russia war resulted in commodity prices, including coal, on the world market. go on.

The increase is a blessing for Indonesia. Without the windfall sustenance from rising commodity prices, Indonesia’s fate will surely be ruined because the cost of subsidies and energy compensation reaches IDR 502 trillion.

The world is not doing well. According to Bank Indonesia (BI), there are five things that are a challenge. One, the global economic slowdown. BI estimates that the global economy is projected to grow 3% this year, in 2023 it is estimated to weaken to 2.3%. Two, spikes in inflation in several countries in the world. Inflation in the US has reached 9.2%. Inflation makes global economic growth decline.

Three, aggressive interest rate hikes in developed countries, especially in the US and Europe, to reduce inflation. Fourth, the increase in the Fed’s interest rates which increases the US dollar index. As a result, world currencies eroded due to high interest rates. Five, the risk perception of investors. Uncertain situations encourage investors to withdraw their funds.

All that makes the rupiah is not doing well. In the medium-short term, the rupiah will still struggle against its weakening destiny. God may still love Indonesia – it looks like coal prices are still high – so that Indonesia will not enter the brink of recession. It could be true – Indonesia is not in a recession, but is experiencing an economic downturn.

However, the expectation of the owners of money, including deposits in banks, is not to collide with the dollar, which is certain to make the rupiah collapse. Irony. Exports rose, but the rupiah was sluggish.

Ironically, the rupiah collapsed in the midst of Indonesia’s export figures which continued to set record highs. Trade balance surplus. The rupiah should not collapse if the foreign exchange proceeds from exports (DHE) “hang” in banks in Indonesia. There should be a regulation that regulates more firmly so that DHE can survive in the safes of banks in Indonesia.

Unfortunately, banks in Indonesia are only used as “places” to get credit. Banks in Indonesia are not considered by tycoons as a place to raise their DHE. The export results are only briefly recorded in Indonesia, and after that they fly to Singapore. Moreover, currently, the interest rates of banks in Singapore are “sweeter” compared to banks in Indonesia.

Singapore is a heaven for Indonesian tycoons raised entirely by state-owned banks. Since the New Order until now, the tycoons have been completely supported by state-owned banks. Starting from plantation land concession rights, mining, to investment credit for factory construction.

The dollar-generating tycoons are certainly not to blame. No rules are violated, even these tycoons often help the government if the rupiah “slows down” too deep. These tycoons are like “private central” banks because important people sometimes call them to release the dollar so that the rupiah is a little “impressive” against foreign currencies, especially the US dollar.

It is better to make a new policy so that DHE can feel at home in domestic banks. If the rupiah is getting sluggish, the President can also make a Government Regulation in Lieu of Law so that all DHE can enter the country. Do not use state-owned banks as addresses to seek credit only, but when there is a result, banks in Singapore choose to accommodate the abundant dollars so that this collection of tycoons is like a “private central” bank.

A stable rupiah is far more important than the presidential candidate affairs that create uncertainty. It is time for politics not to be the commander in chief, but the economy to be the commander in chief. Political affairs and uncertainty caused the rupiah not to feel at home in the country. So far, from the New Order to the Netizen Order, whoever the president is, the country of Singapore will still enjoy it.

Rupiah oh rupiah. Expectations of the rupiah will fail are happening in the society. Moreover, the fact is, even though we are proud that our export performance has increased sharply compared to anyone else’s regime, the rupiah is still not doing well. Irony. (*)