Pressure on rupiah not yet over in short term: Minister

Jakarta (VNA) – Indonesian Coordinating Minister for Economy Darmin Nasution said the pressure on rupiah would not yet be over although it is relatively stable hovering in a narrow range of 14,500-14,600 per US dollar after dropping to the level of 15,000 rupiah per US dollar a few weeks ago.

Nasution said external pressure brought about by normalisation policy of the US Federal Reserve (Fed) – the central bank, the trade war threat and commodity price fall would still determine the rupiah condition.

According to Bloomberg, rupiah has depreciated by 10 percent this year amidst a stronger US dollar after the Fed raised its interest rate.

In facing the pressure, the one the government could do is to strengthen the economic fundamental by cutting current account deficit, Darmin said. According to him, the result would not come in short term to help stabilize rupiah against the US dollar.

The government, therefore, will continue to redress the current account balance such as by issuing the 16th economic policy package in a bid to increase capital account surplus.

The policy package covers revision of the Investment Negative List (DNI), to draw foreign exchange in export earning to be kept in domestic banks and improvement of tax regulation.

Meanwhile, the Jakarta Association of Young Indonesian Business People (Hipmi Jaya) asked the government to review its decision relaxing the Negative Investment List (DNI) opening 54 business areas for new investment including by foreign investment. Under the previous DNI the 54 business areas are closed to foreign investment.

Hipmi Jaya fears that the policy is potential to weaken the position of Indonesian micro, small and medium enterprises (UMKM) which is the backbone of the country's economy contributing 62.58 percent to the country's GDP.-VNA