Jakarta, CNBC Indonesia – Minister of Finance Sri Mulyani Indrawati opened her voice regarding the condition of the escape of foreign funds from Indonesia and the rupiah exchange rate which continues to be depreciated. The United States Dollar (US) is now slightly touching the level of Rp. 15,000.
“Several economic indicators, especially from a financial perspective, interest rate exchange rates and inflation in the current world situation will still be very dynamic,” he said at the DPR/MPR Building, Jakarta (5/7/2022)
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The rupiah actually opened trading today by strengthening 0.1% to Rp 14,950/US$, but soon turned down 0.17% to Rp 14,990/US$ which was the weakest level since May 2020.
At the close of trading, the rupiah was at Rp 14,985/US$, down 0.13% on the spot market, Refinitiv data reports. Rupiah is now 0.1% away from the psychological level of IDR 15,000/US$
Sri Mulyani explained that several pillars of Indonesia’s economic fundamentals were quite good. For example, in terms of the current account balance, it recorded a surplus in 2021, supported by improved terms of trade in line with the increase in commodity prices, and again recorded a surplus in the first quarter of 2022.
Foreign exchange reserves at the end of May 2022 were recorded at USD135.6 billion, equivalent to more than six months of imports and servicing of government external debt, and well above Indonesia’s foreign debt maturing in one year.
It’s just that the US Central Bank raised its benchmark interest rate aggressively, making it more attractive to investors. The weakening of the exchange rate was also experienced by many other countries, even worse.
“Capital flow may happen, with a fed rate, people are looking for places where” people think the interest rate is higher. This is all that we have to manage in managing both 2022 and 2023,” he explained.
Indonesia is the country that most foreign investors leave behind in the bond market. Total foreign funds out of the Indonesian bond market exceeded US$ 3.1 billion last quarter.
Foreign investors left Indonesia not because of domestic fundamentals but more because of recession fears.
Bank Indonesia data shows that until the first semester of this year, there was an outflow in the Government Securities (SBN) market of Rp. 111.12 trillion, while in the stock market there was still an inflow of Rp. 61.82 trillion.
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