Interest Rate Hike Could Become the Short-Term Solution

The Indonesian currency has been fluctuating between Rp 14,800 and Rp 14,900 per US dollar for the past two weeks. As the solution, BI needs to immediately raise the benchmark interest rate in order to halt the outflow of foreign funds and lure them back into the country.

KOMPAS/RADITYA HELABUMI

Atmajaya University rector Prasetyantoko (right) and UOB Indonesia economist Enrico Tanuwidjaja speak in a Kompas panel discussion with the theme "Halt the Weakening of Rupiah Exchange Rate" in Jakarta on Friday (14/9/2018). Other speakers included Indonesian Palm Oil Producers Association (Gapki) chairman Joko Supriyono, Bank Indonesia monetary management department head Nanang Hendarsah and economist Faisal Basri (not shown).

JAKARTA, KOMPAS — The rupiah exchange rate is still unstable. The Indonesian currency has been fluctuating between Rp 14,800 and Rp 14,900 per US dollar for the past two weeks. As the solution, Bank Indonesia needs to immediately raise the benchmark interest rate in order to halt the outflow of foreign funds and lure them back into the country.

Meanwhile, related stakeholders also need to use a non-market approach in dealing with investors, exporters and importers. On the other hand, exports need to be further promoted by raising the palm oil trade and implementing a trade barter scheme.