Jakarta, CNBC Indonesia – The Composite Stock Price Index (IHSG) jumped 1.28% to a level of 6,773.44 until session I today, Tuesday (17/1/2023). This strengthening could not be separated from the appreciation of the rupiah against the United States (US) dollar.
This morning the rupiah touched IDR 14,975/US$. This is the strongest level since September 20, 2022.
If investigated deeper, the strengthening of the rupiah occurred as a result of the attitude of President Joko Widodo (Jokowi). Jokowi officially revised the rules regarding Export Proceeds (DHE) as contained in Government Regulation (PP) Number 1 of 2019.
This change is intended to increase the country’s foreign exchange reserves because so far Indonesia’s export results have shown positive growth.
Imagine, Indonesia managed to record a trade balance surplus for 31 consecutive months, but this fact did not necessarily strengthen foreign exchange reserves.
The surplus for 31 consecutive months made Indonesia’s export value touch US$ 609.1 billion or more than Rp 9,500 trillion. Unfortunately, the position of foreign exchange reserves (cadev) did not move much in the range of US$ 130-140 billion in the span of 31 months.
Indonesia’s foreign exchange reserves at the end of December 2022 reached US$ 137.2 billion, far less than Thailand (US$ 201.9 billion as of October 2022), Singapore (US$ 282.2 billion), India (US$ 534.02 billion), and South Korea (US$ 414 billion).
President Joko Widodo (Jokowi) revealed that this revised policy was taken because he wanted exporters to keep export proceeds (DHE) in the country within a certain period of time. With these dollar coffers, Indonesia’s external conditions will be stronger if it has to face future shocks.
This was conveyed by the Coordinating Minister for the Economy Airlangga Hartarto according to President Jokowi’s direction in a limited cabinet meeting at the Presidential Palace, Wednesday (11/1/2023).
“Through PP 1 we will arrange for the foreign exchange to come in first so that it will strengthen our foreign exchange,” said Airlangga.
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