REPUBLIKA.CO.ID, JAKARTA -- An economist of University of Indonesia Muslimin Anwar said the weakening of the rupiah’s exchange rate was triggered by a number of factors. Firstly, he said, it was due to USD appreciation against nearly all global currencies after the release of improved US economic data as well as the planned hike to the Fed Fund Rate.

"This development had led currencies from other regions to experience corrections as well," Muslimin told Republika Online on Thursday, March 12.

Secondly, he added the monetary liquidity injection channeled by the European Central Bank (ECB) and Bank of Japan (BoJ). Thirdly, the risk of increasing current-account deficit if no progress is seen in structural reform.

However, Muslimin believed that although the weakening of rupiah would have a side effect to push up Indonesia’s economic growth through increasing exports, Bank Indonesia will consistently maintain rupiah stability, in accordance with its fundamental value, thereby supporting macroeconomic stability as well as controlled economic rebalancing in a sounder and more sustainable direction.

Beside, the recent rupiah fluctuation beneficials in terms of the current account deficit through lower imports, in particular of consumer goods, as well as greater export competitiveness, especially of manufacturing exports.

The value of rupiah now falls to 13.200 IDR per US dollar in the spot market. The government has said that the depreciation of rupiah will lift the 2015 deficit national budget up into a surplus budget.

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