TEMPO.CO, Jakarta - Bank Indonesia ensured that the national economy would not experience the monetary crisis similar to 1998 despite plummeting rupiah rate against the US Dollar in the first semester of this year.
“We need to be cautious, but there’s no need to panic. The situation is far better [than in 1998],” Bank Indonesia governor Agus D.W. Martowardojo said on Monday, July 13, 2015.
According to Agus, the plummeting rate of a currency does not necessarily represent that the economy of the country is weakening. For instance, Agus added, Japan and South Korea had intentionally weakened their currency rates to improve the competitiveness of their products.
“With uncertain global situation since 2013, we designed policies that prioritize economic power instead of growth rate,” Agus added.
Agus revealed that BI and the government agreed that the current trade balance improvement was the most important priority. The increasing imports must be reduced amid the declining exports and market demands.
“The policies must be executed by raising interest rates and maintaining the exchange rate. The current rupiah rate has reflected Indonesia’s economy,” Agus explained.
BI senior deputy governor Mirza Adityaswara added that the declining foreign exchange reserves were caused by stabilization.
“Our foreign exchange reserves in June stood at US$108 billion. It’s a safe figure since it can cover our imports for the next six month,” Mirza said.