Economist urges export focus to support rupiah stability
He said a stronger rupiah cannot rely only on interest rates if new foreign exchange earnings from external sectors remain limited.
Senior economist Didik J Rachbini said Indonesia's economic policy needs to be more outward-oriented to support rupiah stability. In his view, an economy that relies too heavily on consumption and domestic turnover only increases rupiah-based transactions, but does not add the foreign exchange supply needed as a buffer for the currency. For that reason, he is urging export-based policies so more income flows in from abroad. Didik said the large domestic market can indeed sustain growth, jobs, and corporate profits. However, without competitiveness in the external sector, the rupiah will remain vulnerable. He also said Bank Indonesia will not be able to rely on interest-rate tools alone if the foundation for foreign exchange receipts from abroad remains weak.