The Strong Dollar Paradox

Indonesia is currently experiencing a "Strong Dollar Paradox," where the Rupiah has weakened past Rp18,000 against the US Dollar, a development widely reported by foreign media and sparking intense discussion among the public.

WhatsApp groups have transformed into impromptu financial forums, with everyone offering theories. Blame is cast on the government, oligarchs, foreign speculators, and even a hidden global economic war. Some even suggest political changes, like replacing the Finance Minister. Amidst this financial turbulence, a striking figure emerges: public trust in the Prabowo-Gibran administration hovers around 74 percent, according to surveys like Poltracking.

This creates a paradox: the market appears anxious, and the Rupiah is weakening, yet public confidence remains robust. It's akin to observing a dark, stormy sky from a ship where passengers calmly enjoy their coffee. Some dismiss the surveys as inaccurate, while others deem the Rupiah's weakening insignificant. Both perspectives might be flawed.

The dollar exchange rate and public trust are thermometers measuring different parts of the economy. The exchange rate reflects market confidence, while surveys gauge public trust. They often move together but not always. Markets are volatile, reacting to potential future events like a startled bird. The public, however, tends to judge based on current realities: the price of rice, road construction, job availability, and children's education. Markets scan weather maps; the public checks the pantry. Thus, it's not unusual for the dollar's strength and public satisfaction to diverge, each looking at different indicators.