UNS – Covid-19 or Coronavirus pandemic affects the rupiah exchange rate. Currently, rupiah weakens against the US Dollar. This weaken receives wide attention in the midst of the global pandemic. The economic expert from Universitas Sebelas Maret (UNS) Surakarta, Riwi Sumantyo is very concerned with the weakening because it touches Rp 16,000 per USD, which the lowest in the last five years.
Currently, rupiah exchange toward USD keeps weakening. The rupiah exchange accessed from Bloomberg site on Friday (20/3/2020), is Rp 16,037 per USD. A drastic decrease from early March when Indonesia has not detected Covid-19 pandemics.
The weakening of rupiah will have various impacts on Indonesia’s economics. Imported goods will have a higher price. Corporations or firms that use imported raw materials will generate lower profit because of expensive raw materials. For companies that have debts in dollar denomination, they will experience loss because the interest and principal have to be paid in the dollar. If this condition does not get better, in the future, there will be layoffs and unemployment.
“If raw materials are imported, it will affect the selling price. It means that to cover production costs, the price needs to go up. When (the price) goes up, does the community have purchasing power? If people purchasing power is low or even zero, thus, the goods will not sell. This is what will affect our economic movement,” Riwi stated.
Many sectors were disadvantaged or experienced the most impact from the weakening of the rupiah. These sectors are mostly those that rely on imported raw materials such as manufacturing, pharmacies, animal feed, and others. However, theoretically, there are other sectors that are advantaged, for example, furniture and coal industries that exported their products. Thus, their income will increase.
The academic member of the Faculty of Economics and Business UNS also predicted that if Indonesia’s condition is stagnant, rupiah will continue to weaken. “If Indonesia’s condition remains (as it is), Covid-19 not solved immediately, I predict that rupiah can reach past Rp 16,000 and it has been proven today,” he said.
The role of the government and the community is needed to stabilize the rupiah exchange rate. Riwi stated that one of the ways to take now is to solve the Covid-19 issue because this pandemic will impair the economy. Riwi also added that “Bank Indonesia as a central bank has the monetary authority. Bank Indonesia is expected to issue a policy that can restrain rupiah from weakening, for example conducting an intervention to the market by purchasing rupiah and selling dollar. But if the negative sentiment is too strong, this action will be worthless because it will squander the foreign exchange. Thus, the state foreign exchange will be drained for this intervention because Indonesia’s foreign exchange strength is not as strong as other countries.”
Riwi leaves a message for the community, especially to the academic community for at least provides appeal, a suggestion so that the community does not take speculative actions like panic buying and panic selling. Keeping the rupiah from falling further. “The effort of selling dollar can be a way Efforts to sell dollars can also be an effort even though the impact is not too significant, it can be exemplified by the elite of officials so that at least there is a symbolic action taken by officials so that it is followed by the public. But most market actors also implement the principle of “money does not have a nationality” which means the actions taken tend to give priority to economic rationality. Whether it is profitable for them or not,” Riwi concluded. Humas UNS/Bayu