[JAKARTA] Indonesia’s Finance Minister Purbaya Yudhi Sadewa said on Tuesday (Oct 14) that the rupiah is likely to strengthen in the fourth quarter, with capital inflows set to increase once foreign investors see improvements in the country’s economic prospects.
Purbaya took over from respected former minister Sri Mulyani Indrawati last month amid widespread protests across the country. Some economists blamed the protests on rising inequality and a lack of job opportunities in South-east Asia’s largest economy.
Having been tasked to revive economic growth, one of Purbaya’s first acts was to transfer 200 trillion rupiah (S$15.6 billion) of government cash from the central bank to five state banks, with the aim of increasing liquidity and encouraging lending. Purbaya has previously said that growth would top 5.5 per cent in the fourth quarter of this year before rising to 6 per cent next year, due to the impact of his liquidity policy.
“I’m sure later in the fourth quarter, once they know the economy is heading in the direction of improvement, foreign capital will return and the rupiah will tend to be stronger than now,” Purbaya told a press conference.
The rupiah was trading slightly weaker compared to the previous day’s close at 0735 GMT on Tuesday, slipping to 16,575 a dollar. It has been among the worst performing emerging Asian currencies so far this year.
Purbaya said the government ran a budget deficit of 371.5 trillion rupiah, equivalent to 1.56 per cent of GDP, in the January to September period, bigger than the 1.1 per cent of GDP in the same period of 2024.
The outlook for the rest of the year was still 2.78 per cent of GDP, according to a slide presented by Purbaya.
Government revenues during the first nine months of 2025 fell 7.2 per cent from a year earlier to 1,863.3 trillion rupiah, while total expenditure reached 2,234.8 trillion rupiah, 0.8 per cent below the levels in the same period in 2024.
“This shows the budget remains adaptive and credible to maintain a balance between economic recovery and medium-term fiscal sustainability,” Purbaya said. REUTERS
