Rupiah Decline and Oil Surge Impact Indonesian Industry

Indonesian manufacturers are facing the double-edged sword of a weaker rupiah against the US dollar and an increasing oil price, which make the input costs to local companies higher. The rupiah's fall in the past weeks can mainly be attributed to uncertainties relating to US monetary policies and geopolitical tensions. Yesterday, rupiah has remained in the range of Rp 16,200 to Rp 16,300 against dollar since Tuesday. Surprisingly, the currency has went as low as Rp 16,000 against dollar during the IdulFitri holiday period.

On the other hand, the oil benchmark of Brent, which is an international standard, pushed to a six-month peak last week, declining by 3 % on Wednesday, settling at US$87.29 a barrel. In accordance to projections, the price is believed to reach $90 per barrel. Jemmy Kartiwa, Chairman of the Indonesian Textile Association (API), told on Thursday that the fall of the rupiah, which is the Indonesian currency, made the difficulties that domestic textile industry faced even worse. 

Those already challenged by their export opportunities shrank and competition from foreign imports greatly increased. Adhi S. Lukman, Gapmmi chairman, said on Thursday that rising energy and logistics expenses due to fluctuated exchange rates and oil prices have resulted in production costs spike, thus.