Indonesia Hopes to Gain from Weak Rupiah in 2015

Jakarta (Antara Bali) - Deputy Governor of Bank Indonesia Perry Warjiyo said the country could gain from rupiah being weak against the US dollar in 2015.

Ferry said rupiah is expected to remain weak throughout this year and the condition is expected to boost exports especially exports of manufactured goods.

"Weak rupiah would improve the competitive edge of the country's manufactured products in international market," he said at a meeting with the Budget Body of the House of Representatives here on Wednesday.

He said the central bank predicted that rupiah would hover at the levels of 12,200-12,800 per US dollar or about the same as the government target of 12,500 per dollar as set in the revised draft state budget for 2015.

"The range is still realistic. The rupiah exchange rate , apart from strengthening the competitiveness of our manufactured commodities, could also boost production. This is good for our economy," he said.

He said there are a number of factors causing change in the rupiah exchange rate such as the improvement of the US economy and uncertainty in stock market as a result of the Fed's plan to raise its benchmark interest rate.

In addition, current account deficit would continue to weigh on rupiah contributing to its volatility that tended to depreciate this year, he said.

"Therefore, the policy of Bank Indonesia would be directed to keeping the rupiah exchange rate in line with the condition of the country's economic fundamentals and to maintain rupiah stability," he said.

On the same occasion, a deputy of the Central Bureau of Statistics, Sasmito Hadi Wibowo, said an exchange rate of Rp12,500 per dollar could help in achieving export target and end years of trade deficit.

Imports of capital goods are forecast to rise still this year as the government wanted to boost investment, but in order to prevent the trade deficit from being too high the government needs to facilitate exports especially exports of manufactured goods, the market of which is less affected by the global commodity price fall, Sasmito said .

The rupiah exchange rate of 12,500 per dollar was set in anticipation of large imports of capital goods by the government needed in the implementation of its large scale infrastructure development plan, he said .

Big exports would be needed to curb deficit from widening and the exchange rate of Rp12,500 per dollar could make "our products more competitive in international market," he said
The government and the Commission XI of the Parliament have agreed on the target for rupiah exchange rate, which is weaker than earlier assumption of Rp12,200 per US dollar.

Meanwhile, Bank Indonesia recorded that until January 21, rupiah traded at the level of 12,610 per dollar on the average. (WDY)