As of today, Rupiah has gone down to 12,045 to the dollar, and is predicted to continue to weaken over the next few weeks. This economic dwindling phenomenon is said to have been caused by the foreseeable increase interest in borrowing rates by the Federal of Open Market Committee (FOMC). However, the FOMC meeting resulted in the delay of interest rate increase at least until the middle of next year. The fact that Rupiah still continue to weaken might indicate that FOMC’s decision to keep interest rate low at the moment has not play any part in strengthening the country’s currency.

Peter Jacob, Bank Indonesia’s communication director, mentioned Scotland’s separation from the UK as one of the factor that may affect the Rupiah rate going further down. Another speculated issue is the fact that the current president, SBY, refused to increase fuel price until the end of his term.
The finger pointing of who and what to blame in the devaluation of Indonesia’s currency is a game played at least once a year. We’ve gone through this exact same run around the past 3 years, and all three years we’ve had to deal with Rupiah being valued at over 12,000 to the dollar. By now economic analyst should already began to draw a pattern showing how Rupiah fluctuates in quite a stable mode the past three years. Any heavy political event both nationally or internationally normally caused the currency to take the heat.

As of now, despite FOMC, Scotland vs UK, or subsidized fuel rate, what we can see is the fact that the country will hand over the current leadership throne to a new president, namely Joko Widodo. Rupiah has been predicted to continue to weaken and possible further down, most likely following the inauguration of the new president. This will put pressure on the new set of Government of Indonesia. Jokowi has been rumored to have plans to increase the price of gasoline, and we have yet to see any stability in a nation-wide acceptance of the foreseeable new leadership by Jokowi.

The way I see it, the uncertainty of political situation while transition is coming closer by the day might play a major part in affecting the strength of Indonesia’s currency. Foreigners on the island can temporarily enjoy an increased value of their bank notes, while economics scratch their heads for a solution.