Indonesia: Government monitors inflation as rupiah continues to weaken

• May 11, 2018

Finance Minister Sri Mulyani Indrawati has said the government will closely monitor inflation as rupiah exchange rate against US dollar continues to weaken.

The rupiah has been valued at more than Rp 14,000 to the US dollar in the last three days, its weakest position since 2015. It was trading at Rp 14,074 to the dollar on Wednesday, according to the Jakarta Interbank Spot Dollar Rate (JISDOR), from Rp 14,036 the previous day.

“We need to watch and study the impact of the rupiah weakening through two things – inflation that could be a result of imported goods as well as subsidized fuel and electricity,” Sri Mulyani said in Jakarta on Tuesday night as reported by kompas.com.

The government and Bank Indonesia are cooperating to keep inflation in check, the minister said.

According to the Central Statistics Agency (BPS), imports increased 12.75 percent in the first quarter of 2018. The high import growth caused a trade deficit in January and February.

Sri Mulyani said she discussed the impact of subsidized fuel on inflation with Energy and Mineral Resources Minister Ignasius Jonan and State-Owned Enterprises Minister Rini Soemarno.

The three focused on how to maintain the performance of state-owned oil and gas company Pertamina and state-owned electricity company PLN to assure that a government program could be implemented while the state budget remained healthy.

“We want to see financial balance at PLN and Pertamina, particularly Pertamina, so that we can introduce a policy to minimize the impact of external disruption,” she added. (bbn)

Source: http://www.thejakartapost.com/news/2018/05/09/government-monitors-inflation-as-rupiah-continues-to-weaken.html