BI also reported that the rupiah stability remains intact in line with the policy commitment instituted by BI. Rupiah stability in June 2024 (as of 19th June 2024) has been maintained, despite losing 0.70% (ptp) in value after appreciating 0.06% (ptp) in May 2024 compared with conditions at the end of the previous month.
Rupiah depreciation was impacted by high global financial market uncertainty, primarily given a lack of assurance regarding FFR reductions, the strong US dollar and deepening geopolitical tensions. In terms of domestic factors, pressures on the Rupiah stem from higher corporate demand for foreign exchange for the repatriation of dividends, among others, as well as the current perception of fiscal sustainability moving forward.
Consequently, the Rupiah has lost just 5.92% of the value recorded at the end of December 2023, less severe than the depreciation experienced by the South Korean won, Thai baht, Mexican peso, Brazilian real and Japanese yen at 6.78%, 6.92%, 7.89%, 10.63% and 10.78%, respectively.
Moving forward, the Rupiah exchange rate is projected to remain stable given BI’s commitment to Rupiah stability, supported by foreign capital inflows, attractive yields, low inflation and solid economic growth in Indonesia.
The rupiah exchange rate against the United States (US) dollar finally closed higher on Monday (June 24) and touched the level of Rp16,394. The strengthening of the rupiah occurred amidst weakening movements in the greenback.
That said the market responded positively to the International Monetary Fund’s (IMF) statement, which reminded the elected president and vice president, Prabowo Subianto-Gibran Rakabuming Raka, to commit to keeping the fiscal deficit below 3% of Gross Domestic Product (GDP).
Minister of Finance Sri Mulyani Indrawati emphasized that the State Revenue and Expenditure Budget (APBN) deficit would remain below 3%, which was the government’s commitment and continued by Prabowo Subianto.