Governor of the Indonesian Central Bank (BI), Perry Warjiyo, has predicted that the rupiah exchange rate against the US dollar will remain stable and even tend to strengthen in the near future amidst global uncertainty due to escalating geopolitical tensions in the Middle East.
“Before geopolitical tension in the Middle East heats up, the rupiah was already at Rp15,550 per US dollar. In the future, we are still confident that the exchange rate will be stable and tend to strengthen,” Perry told a press conference in Jakarta, on Wednesday, October 16, 2024.
He said that one of the main factors supporting the strengthening of the rupiah exchange rate is Indonesia’s strong economic fundamentals. He emphasized that despite increasing uncertainty in the global economy and financial markets, the Indonesian economy continues to show quite good resilience.
According to Perry, economic growth is projected to remain in the range of 4.7-5.5 percent. Meanwhile, inflation is also maintained at a low level according to this year’s target, namely 2.5 percent with a tolerance of plus or minus one percent. In September 2024, consumer price index inflation was recorded at 1.84 percent (year-on-year), indicating that inflation across all components is still at a low level.
Furthermore, Perry added, that the current account deficit (CAD) is also at a low level, which is well below two percent. For this year, BI estimates the CAD to be in the range of 0.1-0.9 percent of gross domestic product (GDP). In fact, the projection for next year is still relatively safe at 0.5-1.1 percent of GDP.
“Next year current account deficit is estimated at 0.5-1.1 percent. That’s low. If it’s above 2 percent, then we need to be more vigilant,” Perry said.
Perry acknowledged that tensions in the Middle East remain an external factor affecting the stability of the rupiah exchange rate. However, he remains optimistic that future exchange rate movements will not experience significant changes.
“Even if there are changes, they are not very significant. The most influential thing at the moment is the tension in the Middle East,” Perry concluded.
