Rupiah at Rp 18,000 Doesn't Hamper Government Debt Payments, Says Finance Minister

Indonesian Finance Minister Purbaya Yudhi Sadewa asserted that the rupiah's recent depreciation to Rp 18,000 against the US dollar has not compromised the government's debt repayment capacity. He clarified that the fixed-rate nature of government debt coupons means exchange rate fluctuations have a limited effect on the principal payments.

However, Sadewa acknowledged that the weakening rupiah does increase the cost of servicing foreign currency-denominated debt interest payments when converted into local currency. Despite this, he maintained that the current currency movements remain within the government's projected calculations. The government had based its national budget on an exchange rate assumption of Rp 16,500 per US dollar.

Sadewa further suggested that the rupiah's fundamental value is stronger than its current trading level, implying that the current depreciation is temporary or influenced by factors beyond underlying economic strength. He mentioned that simulations were conducted regarding the rupiah's exchange rate during past periods of rising fuel prices due to geopolitical conflicts, though he did not detail these simulations.

In parallel, Bank Indonesia (BI) confirmed its intensified intervention in the foreign exchange market to counter the rupiah's continued weakening. Senior Deputy Governor Destry Damayanti stated that the central bank is employing a range of pro-market monetary instruments to attract capital inflows. These interventions include consistent transactions in Non-Deliverable Forwards (NDF) in offshore markets, spot transactions, and Domestic Non-Deliverable Forwards (DNDF) domestically, alongside purchases of government bonds in the secondary market.