IDR Rise Set to Persist despite Concerns
JAKARTA, KOMPAS.com - Traders continue to expect the rupiah to push higher despite warnings from a government official that the local currency's strength could hurt Indonesia's manufacturers.
“What I'm worried about is the rupiah's strengthening would encourage importation, (also) with the fact that most of our import tariffs are already low,“ Agus Tjahajana Wirakusumah, Director General of International Industrial Cooperation at the Industry Ministry tells Dow Jones Newswires.
He adds some exporters have expressed their concerns about the rupiah's appreciation, especially those who export their entire output. His comments mark the first time a government official has raised concerns about the negative impact of the rupiah's sharp appreciation on domestic manufacturers.
Still, dealers say that the government will continue to tolerate further rupiah gains as one of the ways to fight inflation in the short term. They also note that a higher rupiah will reduce the government's offshore debt servicing burden.
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