Expert: 2015 Rupiah Exchange Rate Target Too Confident

TEMPO.CO, Jakarta - Universitas Indonesia Economist Lana Soelistianingsih said the 2015 rupiah exchange rate target set by the government is very confident. "Setting the target at around Rp11,500 - Rp12,000 per US Dollar may be counterproductive towards investors," Lana said to Tempo earlier today.

The appraisal came in response to the President Susilo Bambang Yudhoyono’s 2015 State Budget address in front of the parliament this morning.

Lana claimed that market players would be much more confident about investing in Indonesia if the rupiah hovers at around Rp11,000 per US Dollar. "The market becomes appreciative and confident of Jokowi’s ability when the rupiah hovers around that level," added Lana, hoping the next administration would decide in favor of a stronger rupiah.

That being said, Lana agreed that the 5.5 to 6 percent target for economic growth set by the government is reasonable. "It is hard to expect Indonesia’s economy to grow beyond 6 percent given the current economic circumstances," she explained.

According to Lana, the government is being too naive when it comes to inflation, because they seem to cut the increasing price of subsidized fuels in their calculations. Therefore, the 4-percent inflation target is too ignorant of the fact that price hikes for subsidized fuel may indeed bring the inflation figure to 7 percent.

"There had been indications that the government is going to increase the price of fuel, but the draft of the 2015 State Budget accommodates no negative sentiments that may play out," said the economist.

DINI PRAMITA