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VIVA – The trend of strengthening the rupee against the US dollar continues throughout November 2018. Garuda's currency has been able to strengthen below the 15,000 rupees mark on 2 November to 14,535 rupees currently, on the basis of Reference rate data from Indonesian bank Jisdor.
The chief economist of the Institute for the Development of the Economy and Finance (Indiaf), Faisal Basri, revealed that the strengthening of the rupee was purely and simply due to the efforts of the government to improve the fundamentals of the Indonesian economy, but only on debts constantly withdrawn.
Faisal proved that the increase in debt was created by the rapid flow of foreign capital or Foreign direct investment which is going in the last few days in terms of portfolio or government securities. This, he said, was used by one of them for the physical reconstruction of several cities affected by natural disasters, including that of Palu.
"This year, the government is planning a debt increase, the reconstruction uses debt because the money is spent on infrastructure, so the physical is more valuable than humans," said Faisal at Bidakara Hotel in Jakarta. Wednesday, November 28, 2018.
"It seems that the government debt has increased, the debt has been further withdrawn, so that it contributes to the exchange rate of the rupee.The rupee does not improve therefore because of our blood. cold but debt, "he said.
On the other hand, he continued, the influx of foreign capital into the short-term portfolio could strengthen the currency of a country because of capital inflows. However, he stressed, as long as the current Transakai deficit is not structurally addressed, the room for maneuver to weaken the rupee is still open.
"As a result, the short-term phenomenon of rupiah may become stronger, and in the medium term 99 per cent of the rupiah will weaken next year." How serious is the problem of weakening? did he declare.
Therefore, Faisal stressed, the current account deficit issue must be fully resolved by the government in order to maintain exchange rate stability. The solution, not only on the issue of trade in goods and services, but also through the meeting of foreign capital attracted by investors to their own country.
Repatriation, he said, is currently worth $ 20 billion. At the same time, the trade deficit in goods and services amounted to US $ 2.2 billion and US $ 2.7 billion respectively. Thus, he stressed, the government must be able to integrate foreign capital into Indonesia.
"So the government does not talk about it, so it's not an export-import, only a quarter, 5 billion US dollars, it will put it here," said Faisal. (ASP)
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