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🇮🇩 Indonesia /Economy & Trade

Global Economy Shifts to Multipolar: Can Local Currency Transactions Strengthen the Rupiah?

From Republika · (9m ago) Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

TLDR

  • An Indonesian economics observer suggests the global economy is shifting from unipolar to multipolar, with implications for the rupiah's exchange rate.
  • Strengthening local currency transactions (LCT) is proposed as a strategy to mitigate the rupiah's weakening against other currencies.
  • The shift is partly driven by geopolitical events and trade policies, potentially reducing the dominance of the US dollar in international transactions.

The global economic landscape is undergoing a profound transformation, moving away from the unipolar dominance of the United States towards a multipolar order. This shift, driven by complex geopolitical and geo-economic dynamics, presents both challenges and opportunities for nations like Indonesia. As articulated by Muhammad Syarkawi Rauf, an economics observer and lecturer at Hasanuddin University, understanding and adapting to this transition is crucial for safeguarding our national economic interests.

Dunia unipolar ditandai oleh dominasi AS dengan mata uang dolar AS sebagai satu-satunya mata uang dominan dalam transaksi internasional. Sementara dunia multipolar menempatkan AS bukan lagi sebagai pemain tunggal (monopoli)

— Muhammad Syarkawi RaufAn economics observer explaining the shift from a unipolar to a multipolar global economic system.

In this evolving world, the US dollar's long-held supremacy in international transactions is being questioned. Events such as the sanctions imposed on Russia following the annexation of Crimea and subsequent trade policies have prompted nations to seek alternatives. This has led to increased use of other currencies, like China's yuan, and discussions about a potential common currency among BRICS nations, of which Indonesia is now a member. This transition away from a single dominant currency means that countries can no longer solely rely on the US dollar for stability.

Dunia unipolar ditandai oleh dominasi AS dengan mata uang dolar AS sebagai satu-satunya mata uang dominan dalam transaksi internasional. Sementara dunia multipolar menempatkan AS bukan lagi sebagai pemain tunggal (monopoli)

— Muhammad Syarkawi RaufAn economics observer explaining the shift from a unipolar to a multipolar global economic system.

For Indonesia, a key strategy to navigate this multipolar world and cushion the rupiah against potential depreciation is to bolster our use of local currency transactions (LCT). This approach not only strengthens our own currency but also reduces our vulnerability to fluctuations in the global financial system. While Western media might focus on the broader geopolitical shifts, for us in Indonesia, the practical implications for our currency and trade are paramount. Strengthening LCT is a tangible step towards greater economic sovereignty and resilience in an increasingly interconnected yet fragmented global economy. This is a uniquely Indonesian perspective, focusing on practical solutions for national economic well-being amidst global flux.

Kondisi ini diperparah oleh perilaku Presiden AS Donald Trump yang memberlakukan tarif resiprokal ekstra tinggi ke sejumlah negara, termasuk negara-negara yang tergabung dalam BRICS

— Muhammad Syarkawi RaufAn economics observer discussing factors that exacerbated the decline of US dollar dominance.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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