Rupiah Weakens Past Rp 18,000 per Dollar; Conglomerates Urged to Show Nationalism

The Indonesian rupiah's fall below Rp 18,000 against the US dollar serves as a serious warning for the national economy, according to Anwar Abbas, head of the UMKM sector at Muhammadiyah's Central Leadership Council. He views this economic pressure as a critical test of Indonesian conglomerates' nationalism and patriotism.

Abbas explained that the rupiah's depreciation is linked to a surge in dollar demand amid a shrinking supply. A significant factor contributing to this imbalance is the outflow of foreign investment capital from Indonesia, which investors then convert into dollars. "This is clearly due to increased demand for dollars for various reasons, including many foreign investors withdrawing their funds," Abbas told Republika.co.id on Friday.

This withdrawal by major investors has triggered a ripple effect, prompting other investors to sell their Indonesian assets and rupiah holdings to acquire dollars. Consequently, the pressure on the rupiah has intensified, pushing the exchange rate past Rp 18,000 per dollar. Abbas cautioned that the government cannot allow this situation to persist, as it poses serious risks to domestic industries, particularly those reliant on imported raw materials. He highlighted five sectors, pharmaceuticals, electronics, textiles and garments, plastics and downstream petrochemicals, and the automotive industry, as being heavily dependent on imports, with reliance often exceeding 60 percent.

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This is clearly due to increased demand for dollars for various reasons, including many foreign investors withdrawing their funds.