REPUBLIKA.CO.ID, JAKARTA - The deficit on current account due to export slowdown causes the IDR depreciation. The condition forces Bank Indonesia (BI) to alert on the IDR exchange rate.

The Deputy Governor of BI, Hartadi A Sarwono, said the condition of Indonesian economic fundamental made the IDR exchange rate move to depreciation. But, BI promises to maintain the exchange rate so that the depreciation does not go higher.

The export slowdown causes the transaction in the second quarter of 2012 suffering from 6.9 billion USD deficit or 3.1 percent from Gross Domestic Product (GDP). The number is higher compared to the previous quarter, which is 3.2 billion USD or 1.5 percent from GDP. For comparison, the deficit of transaction in the fourth quarter of 2011 was 1.6 billion IDR or 0.7 percent from GDP.

Sarwono predicted the Indonesian economic condition in the third quarter of 2012 would be similar with the second. Yet, economic growth may reach 6.3 to 6.4 percent by the end of the year.

The Director of BI's Monetary Management, Hendar, said the improvement on the deficit of the current account would ease the pressure on IDR exchange rate. The central bank then proposes on import regulation. "The import may growth in accordance with our economic resistance," he said. BI expects the deficit will decrease on the third and fourth quarter of 2012.

Another factor causing the depreciation is global economic condition. The economic condition in US, Europe, and China affect global investors to withdraw their investment. The high demand for foreign currency, especially USD, causes IDR exchange rate to weaken. IDR exchange rate to USD currently weakens to beyond 9,500. BI records the middle rate of IDR to USD is from 9,515 to 9,535.

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