Rupiah Depreciation Not the Worst

The weakening of the Indonesian Rupiah against the US dollar is not unique to Indonesia, but is also experienced by other emerging market economies. Based on Bank Indonesia data as of April 20, 2018, the Rupiah depreciated by 2.32%. The Rupiah exchange rate stood at Rp13,804 per US dollar based on the Jakarta Interbank Spot Dollar Rate (Jisdor) reference rate.

The Rupiah's weakening is not the worst among other emerging market currencies. Year-to-date (YTD), several countries experienced greater exchange rate depreciation than the Rupiah. These include the Paraguayan Guaraní (9.5% depreciation), the Turkish Lira (6.54% depreciation), the Philippine Peso (4% depreciation), the Indian Rupee (3.38% depreciation), and the Brazilian Real (2.81% depreciation).

In contrast, Indonesia's neighboring countries experienced currency appreciation, with the Malaysian Ringgit appreciating by 3.82% and the Thai Baht by 4.01%.

The Bank believes the Rupiah's weakening is temporary. The central bank will continue to strive to maintain the stability of the Rupiah exchange rate. BI stated that import factors are not the main cause of the Rupiah's weakening. Global factors are influencing market psychology, leading to the depreciation.