Rising current account deficit could jeopardize rupiah
Indonesia's current account deficit reached a historic high in the second quarter that, if sustained, would put new pressure on the rupiah’s exchange value.
Indonesia's current account deficit hit a record high in the second quarter, signalling potential challenges for the rupiah. The deficit, driven by rising global oil prices, equated to US$12.5 billion or 3.3 percent of the nation's GDP, marking the highest quarterly deficit ratio since late 2018. While Bank Indonesia acknowledged the reading as "clearly weak," it did not deem Indonesia's external position in dire straits.
However, economist Tay Qi Hang warned that a sustained deficit at this level could undermine the rupiah's exchange value, increase Indonesia's reliance on foreign capital and raise borrowing costs. Persistently high deficits could force Bank Indonesia to maintain tighter monetary policy to stabilize the currency and preserve investor confidence.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
