Paramadina University researcher, Wijayanto Samirin, delves into the complexities underlying the recent depreciation of the Indonesian Rupiah against the US Dollar, positing that the phenomenon cannot be solely attributed to the ongoing tensions between Iran and Israel.
Samirin acknowledges the ripple effects of the Iran-Israel conflict on global oil prices, highlighting the Middle East’s significance as a key oil supplier to Asian economies like China, Japan, India, and Korea. Despite recognizing Indonesia’s relatively robust economic condition, Samirin nuances the assessment, characterizing it as resilient but not entirely robust.
“Regardless of external circumstances, we must remain vigilant as our economic foundation isn’t unassailable,” remarked Samirin during a meticulously curated Zoom discussion titled “Impacts of Economic-Political Policies Amidst the Iran-Israel Conflict” held on Monday, April 22, 2024.
Samirin contends that the Rupiah’s weakening is predominantly driven by concerted efforts from the United States to uphold the supremacy of the US Dollar as the global transactional currency.
“Hence, the persistent high demand for the US Dollar and its stable valuation enable prolific printing, thereby exacerbating its dominance,” he explicated.
He further opines that the crisis in the Middle East serves as a convenient scapegoat for the Rupiah’s depreciation and the Dollar’s ascent.
“I am inclined to suspect that the Iran-Israel crisis is being exploited as a scapegoat; every problem is conveniently attributed to the Middle East turmoil,” he asserted.
According to Wijayanto, Indonesia grapples with fundamental weaknesses amid the current Rupiah depreciation phase. The nation shoulders a hefty debt burden with interest rates reaching 14 percent of the State Budget (APBN), a substantial portion of which is denominated in dollars.
Wijayanto attributes this predicament to the government’s overreliance on borrowing, a situation that he argues has eroded investor trust in the nation’s economic stability.
