The rupiah’s recent heavy falls against the U.S. dollar do not pose a threat yet to the business community, with the fluctuations still within an acceptable range, businesspeople say.
On Wednesday, the rupiah slumped to 12,350 per dollar, its lowest level since September 1998, before recovering to 12,100 at 5:02 p.m. here in Jakarta, Bloomberg reported. The rupiah has dropped by about 20 percent in the past month.
On Jan. 1, the rupiah traded at 9,153 per dollar, central bank figures show, putting the currency’s fall at about 30 percent for the year.
“(The rupiah’s fluctuation) was predicted earlier,” said Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo) and owner of the Gemala Group conglomerate.
“We have calculated the rupiah at about 12,000 (per dollar) for imports.”
However, Sofjan said the business community was concerned about the currency hitting the 15,000 level, and called on the central bank and the government to take all measures to cushion the rupiah from reaching this critical figure.
He suggested the central bank allow the rupiah to fluctuate according to the market, and intervene when necessary.
Indonesia has $50.58 billion in foreign exchange reserves as of Oct. 31.
Bank Indonesia governor Boediono said earlier the bank would maintain the rupiah at a “realistic level”. The current level favors exporters by making their products more competitive in the international market, but is hammering local importers.
Thomas Dharmawan, chairman of the Indonesian Food and Beverage Producers Association (Gapmmi), said importers of raw materials remained relatively immune to the impact of the rupiah’s decline because the prices of the goods were also plummeting.
“Prices of commodities such as wheat and soybean have fallen by about 50 percent. This compensates for the 30 to 40 percent drop in the rupiah,” he said.
“Besides, as other world currencies also fall against the dollar, the prices of their products drop. Only imports from the United States are getting more expensive because of the strengthening dollar.”
He said only those companies that directly sold imported finished products in the domestic market would feel the pinch of the rupiah woes.
Gapmmi expects the rupiah to bounce back to about 10,500 per dollar by the end of the year.
Meanwhile, Finance Minister Sri Mulyani Indrawati said people and businesses needed to adjust to the rupiah’s current level when planning economic activities.
“The problem now is not a shortage of liquidity (in dollars), but of people who don’t want to trade because of a lack of confidence (in other currencies),” she said.
Mulyani added world finance ministers would try to restore the confidence by pushing dollar transactions while the U.S. pumps more dollars into the global market.
“In the end, the combination of these efforts will ease the pressure on the local currency,” she said.
She pointed out that all other global currencies were tumbling against the dollar, with the rupiah still inside a “relatively safe border” compared with other currencies.
Australia, India, Singapore and Thailand have all seen their currencies drop by about 40 percent this year, Mulyani added. Aditya Suharmoko
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