Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Arsjad Rasjid, assessed that the current weakening of the rupiah exchange rate against the US dollar is more due to external factors, including market sentiment towards the stance of the US Central Bank or the Fed which signals that it will hold the benchmark interest rate high for longer. This makes investors more interested in investing their money in US dollars.

"In terms of world risk, Indonesia is higher than the United States. Because everybody loves the dollar, feels comfortable,’ said Arsjad when interviewed by Kompas TV Editor-in-Chief Rosiana Silalahi, in the Rosi programme, Thursday (27/6/2024).

According to him, Indonesia's macroeconomic conditions are currently good. However, the weakening of the rupiah must still be watched by entrepreneurs because it can affect the sustainability of their business.

"This must still be watched out for, in business we must also remain agile. Because geopolitically it is not fine. Macroeconomically, Indonesia is fine,’ he said.

As previously noted, the weakening of the rupiah exchange rate touched Rp16,431 in May due to market disappointment with global economic conditions. The Fed interest rate is not expected to decrease as much as the market expects. So far, the Fed Fund Rate (FFR) is still stable at 5.5 per cent.

Watch the full interview on the following Kompas YouTube channel