By Yazid Bindar, Professor of Bandung Institute of Technology

The weakening of the rupiah exchange rate, which has now broken through the Rp17,000 per 1 USD mark, has raised alarm bells among market players, academics, and the public at large. The sharp rise from the Rp16,000s in a short period of time indicates serious pressure on the national economy.

Many are beginning to ask: is this a sign that Indonesia is heading towards a second monetary crisis, after 1998? Moreover, if the exchange rate continues to weaken and crosses the psychological mark of Rp20,000 per US dollar, then the worst-case scenario could become a reality.