Teknowarta – Mukhamad Misbakhun, Chairman of House Commission XI, has endorsed President Prabowo Subianto’s recent statement regarding the weakening of the Indonesian rupiah against the US dollar, asserting its purpose is to reassure the public. Misbakhun concurred that rural communities generally do not engage directly in transactions involving the US dollar, making them less susceptible to its fluctuations.
“What President Prabowo conveyed concerning the exchange rate is accurate; the public is asked to remain calm, especially those in rural areas, as they are not directly involved in dollar-denominated transactions,” Misbakhun told reporters on Monday, May 18th.
According to Misbakhun, the most significant impacts of the rupiah’s depreciation are felt by import transactions and affluent individuals who frequently travel abroad. He emphasized that the decline in the rupiah’s value serves as a crucial reminder for Bank Indonesia (BI) to align with President Prabowo’s policy direction, which prioritizes the meticulous control of the rupiah’s value.
“The rupiah’s value must be managed and restored to an ideal level. This is paramount because its instability significantly affects communities accustomed to using the dollar in their transactions,” he elaborated, highlighting the broader economic implications.
Misbakhun further elaborated that the reliance on imported raw materials poses a substantial risk as their costs escalate with a depreciating rupiah. He acknowledged that numerous food commodities in Indonesia still depend on these imported inputs. Consequently, he expressed concern that this situation could fuel inflationary pressures due to more expensive raw material imports.
The rupiah’s current position, now exceeding the macro assumptions outlined in the 2024 State Budget by more than a thousand rupiah, underscores these economic challenges. This deviation signals potential strains on the national fiscal framework and necessitates strategic intervention to stabilize the currency.
Previously, President Prabowo Subianto had adopted a composed stance on the rupiah’s recent volatility against the US dollar, even as it touched Rp 17,600 per dollar. Prabowo confidently asserted that Indonesia’s economic fundamentals remain robust and stable, attempting to instill confidence amid market jitters.
He even light-heartedly quipped that as long as Finance Minister Purbaya Yudhi Sadewa could maintain his smile, the public had no reason to be overly concerned about the US dollar exchange rate. “Purbaya handles the finances; he’s incredibly popular now. As long as Purbaya can smile, just relax, don’t worry about it, no matter how many thousands the dollar is,” Prabowo remarked during the inauguration of 1,061 Merah Putih Village Cooperatives in Nganjuk, East Java, on Saturday, May 16th.
Prabowo reiterated his view that the rupiah’s weakening would not directly affect rural communities, whose economic activities primarily operate using the domestic currency. “You in the villages don’t use dollars, do you?” he added, reinforcing his earlier points.
Continuing his jovial tone, Prabowo playfully suggested to the assembled ministers and business figures that those truly feeling the pinch of a weaker rupiah were individuals who frequently travel internationally. “Those who are worried are the ones who like to go abroad. Come on, who are they?” Prabowo teased, drawing laughter from the attendees.
Summary
President Prabowo Subianto has reassured the public regarding the weakening rupiah, asserting Indonesia’s strong economic fundamentals remain stable. He noted that rural communities are less affected as they primarily use domestic currency, unlike importers and frequent international travelers. Prabowo humorously downplayed concerns, urging the public to stay calm.
Mukhamad Misbakhun, Chairman of House Commission XI, endorsed Prabowo’s message but highlighted the significant impact of depreciation on import transactions, escalating raw material costs, and potential inflation. Misbakhun stressed that Bank Indonesia must align with Prabowo’s policy by meticulously managing and restoring the rupiah’s value to an ideal level. This is crucial as the rupiah currently exceeds macro assumptions in the 2024 State Budget, signaling potential fiscal strains.