President Susilo Bambang Yudhoyono continued to monitor the developments of the Indonesian Composite Index (IHSG) and the rupiah.
“The President instructed Finance Minister [Chatib Basri] to coordinate with Bank Indonesia [BI], the Deposit Insurance Corporation [LPS] and the Financial Services Authority [OJK] to discuss ‘policy-response’ and mitigation of the impact of external fluctuations,” Firmanzah, Yudhoyono’s special staffer for economic and development affairs, said in Jakarta on Tuesday, as quoted by Antara news agency.
The President made the statements in response to the US Federal Reserve’s (Fed) plan to reduce its fiscal stimulus (quantitative easing).
The Fed’s plan triggered the weakening of several regional currencies, including the rupiah, as well as numerous regional stock indices including the IHSG.
Arif Budiman, a member of Commission IX at the House of Representatives, said the rupiah exchange rate could potentially continue to fluctuate because the markets had not yet seen fiscal and monetary policies that were comprehensive and worked in together. As a result, the rupiah would continue to weaken against the US dollar.
In this context, Budiman said that efforts to control the rupiah exchange rate were the sole responsibility of BI, then it would further burden the central bank.
He said Indonesia’s deficit trade balance had stood at 4.4 percent of the gross domestic product (GDP) in the second quarter of this year, up from 2.4 percent in the first quarter.
“This is the biggest trade deficit in our country’s history,” said Budiman.
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