Jokowi Requires Exporters to Park Dollars, Rupee Wins Asia!

Jakarta, CNBC IndonesiaThe exchange rate of the rupee strengthened rather sharply against the United States (US) dollar in mid-trade on Wednesday (11/1/2022). The government’s move to keep foreign currency in the country is one of the rupee’s drivers.

According to Refinitiv data, as of 12:55 WIB, the rupee strengthened by 0.58% to Rp.15,480/US$ in the spot market. With this strengthening, the rupee became the best in Asia.

President Joko Widodo (Jokowi) has finally revised the Government Regulation (PP) Number 1 of 2019 related to foreign exchange export earnings (DHE). Several new sectors are included in the list to place DHE with the regulator.

This was conveyed by Coordinating Minister of Economy Airlangga Hartarto at the direction of President Jokowi at a restricted cabinet meeting at the Presidential Palace on Wednesday (11/1/2023).

“The President has also mandated that exports, which have been positive thus far, must be followed by an increase in foreign exchange reserves. For this reason, the President has requested that PP 1 of 2019 DHE be corrected,” he said.

As is known, the issue of US dollar dry supply in the country has made it difficult for the rupee to appreciate.

The dry supply of US dollars can be seen from the trade balance running in surplus for 31 consecutive months, while foreign exchange reserves continue to decline.

Based on data from the Central Statistics Agency (BPS) for January-November 2022, the trade balance surplus was recorded at more than $50 billion.

Bank Indonesia (BI) on Friday reported that Indonesia’s foreign exchange reserve position at the end of December 2022 reached $137.2 billion, up $3.2 billion from its November position.

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With DHE held domestically for a long time, the supply of US dollars will definitely increase again, the rupee can definitely strengthen.

Also, foreign investors are starting to enter the secondary bond market again. Based on data from the Directorate-General for Risk Management and Finance (DJPPR), a capital inflow of up to IDR 12 trillion occurred from 1 to 10 January.

Indonesian bonds, which are again attractive to foreign investors, provide energy for the strengthening rupiah.


[Gambas:Video CNBC]

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Stretched against the US dollar, the rupee is approaching the IDR 15,600/USD level

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