More Room for Rupiah to Appreciate

JAKARTA, KOMPAS.com - The stronger rupiah is benefiting Indonesia's economy, and there's still room for the currency to rise further, Bank Indonesia's deputy governor said Wednesday.

The rupiah's strong rise against the dollar reflects economic fundamentals, and only shows a “very minimal“ impact of currency speculation, Budi Mulya told Dow Jones Newswires in an interview.

The Indonesian unit has risen 6% against the dollar so far this year, hitting a new seven-year high Wednesday morning of IDR8,485 to the dollar, as the U.S. debt-ceiling stalemate weighs on the greenback.

However, the currency's rise is in line with that of other Asian currencies and hasn't cost Indonesia export competitiveness, Mulya said. In fact, he reiterated several times that the stronger currency is on balance benefiting the economy, in part because it makes it cheaper to import materials that are later re-exported as finished products.