REPUBLIKA.CO.ID, JAKARTA -- It is not easy to determine the rupiah exchange rate against the US dollar in the Draft 2019 State Budget (RAPBN). Uncertain global economic conditions and the tendency of the rupiah to weaken was the main obstacle.
Finance Minister Sri Mulyani, at a House of Representatives (DPR) plenary meeting in Jakarta on Tuesday, said that the value of the rupiah was likely to weaken and global economic conditions were uncertain. This global pressure can affect market sentiment and rupiah stability.
"The setting of the rupiah exchange rate assumption in 2019 is a challenge that is not easy, because it must not only reflect a combination of fundamental factors that support the value of the rupiah but must also be anticipatory towards the volatile market sentiment," she stated.
In the 2019 RAPBN, the government determines the rupiah exchange rate against the greenback at Rp14,400 per US dollar. To anticipate the movement of the exchange rate, the government, together with Bank Indonesia (BI) and the Financial Services Authority (OJK), will continue to maintain the rupiah to reflect economic fundamentals. Rupiah is expected to be managed and absorbed in the economy properly.
"Thus, the stability of the economy and the financial sector will be maintained. We will continue to be aware of the movement of the rupiah exchange rate triggered by global sentiment and changes in the policy of the United States," Sri Mulyani revealed.
The government will also continue to strengthen the economic structure by improving the manufacturing industry sector to generate foreign exchange. Thus, imports, especially imports of consumer goods, can be reduced and can support tourism, so that the trade balance and current account become strong.
In addition, according to Sri Mulyani, the improvement in the investment climate is expected to attract foreign capital flows to strengthen the capital account. Therefore, the balance of payments will be stronger and will be able to sustain the stability of the rupiah exchange rate.
"The government also continues to strengthen the domestic investor base and deepen financial markets, so that the stability of government securities can be maintained," the minister explained.
Meanwhile, BI (the central bank) and OJK will continue to maintain the financial system and intermediary function to remain stable and resistant to global shocks. "In order to mitigate and anticipate the risk of the rupiah exchange rate, the government and BI will prepare and utilize regional and global cooperation to strengthen the second line of defense instrument," Sri Mulyani pointed out.