Indonesia’s Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan, one of the most senior figures in President Joko Widodo’s cabinet, says he’s optimistic that the rupiah will return to a more respectable exchange rate against the US dollar in the coming years.
The rupiah has generally weakened under Jokowi, first sinking to its lowest level since the 1998 monetary crisis in December 2014 and continuing to slide until it touched the IDR14,500 mark last year.
The rupiah currently hovers around the 14,100 mark, where it has been for a few months.
Speaking to reporters in Jakarta yesterday, Luhut said he’s optimistic the rupiah will strengthen considerably as the economy improves during Jokowi’s second term as president.
Luhut explained that the strengthening of the dollar should coincide with the government’s attempt to minimize its current account deficit to around US$1 billion within the next three years. The current account came at a deficit of US$7.7 billion, or 2.7 percent of the country’s GDP in the third quarter of this year.
Luhut said that one of the main programs to achieve the government’s ambitious target is to increase the implementation of locally-sourced biodiesel in fuels in order to push energy imports by 25 percent.
The senior minister also said that exports, such as that of steel and lithium batteries, are expected to pick up in the coming years, while tourism can also increase Indonesia’s US dollar reserves.