The Decline of the Rupiah

Slide in Value of the Rupiah Causing Jitters in Bali’s Business Community as Exchange Rate to the U.S. Dollars Passes Rp. 14,000
The continuing devaluation of the value of the Indonesian Rupiah, now trading at more than Rp. 14,000 against the U.S. Dollar, is causing unease in some sectors of the economy.

As reported by NusaBali, business circles are concerned that continuing weakness of the Indonesian currency will negatively impact the ability of businesses to meet financial obligations, and increase the cost of the imported components of gods and services.

Tourism - the leasing sub-sector of Bali’s economy, is also feeling the pinch of a weakening Rupiah. The chairman of the Indonesian Chamber of Commerce in Bali (Kadin), Anak Agung Alit Wiraputra, reminded on Friday, May 12, 2018, that many tourism operations depend, to a lesser or greater degree, on imported goods.

The imported components of the tourism sector include many food and beverage items such as cheese, milk, bread, and meat. Meanwhile, many spas in Bali use imported oils and cosmetic products in their treatment therapies.

Wood processing industries use treatments and manufacturing equipment that are imported and paid for in prices denominated in U.S. dollars.

Alit said that the recent penetration of Rp. 14,000 to one U.S. Dollar mark represented a psychological barrier that can cause panic and lead to a further devaluation of the Indonesian currency.

Ida Bagus Partha Adnyana, chairman of the Bali Tourism Board (BTB) says the cost of many imported foodstuff has increased by 30% since January of 2018.

On Friday, May 11, 2018, the exchange rate of the Indonesian Rupiah against the U.S. Dollar was trading at Rp. 14,048.

Recent post