Indonesian rupiah. History and currency exchange rate

In Indonesia, the official currency is a local rupee. To denote a monetary unit, use the sign Rp. It should be noted that in financial markets such as Forex, Indonesian rupiah is referred to as IDR. In addition, this currency is often unofficially called Perak ("silver" in Indonesian).

The history of the rupee. Banknotes of a monetary unit

At the moment, banknotes of one thousand, two thousand, five thousand, ten thousand, twenty thousand, fifty thousand and one hundred thousand rupees take part in circulation on the territory of the country. For a long period of time, the Indonesian government tightly regulated the exchange rate of the national currency.

Nevertheless, in 1987, the country's leadership changed its monetary policy and refused to control the exchange rate of the national currency. It was decided to grant the Indonesian rupee the so-called "free swimming". In addition, this unit was tied to a multi-currency basket, which included seven world currencies, one of which was the US dollar. Today, the Indonesian rupiah against the dollar has a ratio of 1 USD = 13 549.32 IDR.

In fact, the Central Bank of Indonesia was engaged in quoting the rupee. Setting the exchange rate of the monetary unit, this institution took into account the position of the rupee in relation to the US dollar. In fact, from that moment on, the Indonesian rupee directly depended on the correlation between the American and Indonesian economies.

The dynamics of the Indonesian rupee

As an example of this state of affairs, the situation of 1997 can be cited. Then, the high inflation rate in Indonesia compared to the same in the US led to a significant devaluation of the Indonesian rupee. In addition, the local currency unit lost its positions in relation to other major world currencies, which are included in the above basket of seven monetary units. Also, the Indonesian rupiah to the ruble of the Russian Federation was devalued.

In general, we can say with full confidence that the rate of the Indonesian currency directly depends on the ratio of annual growth in the level of the economies of Indonesia and the United States. And since the US economy is closely connected with the economies of other developed countries of the world, the rupee quotations relative to the major world currencies fluctuate depending on the macroeconomic indicators of these states. The Indonesian rupee to ruble rate also depends on these trends.

Other factors affecting the position of the rupee

It will be by the way to say that the economy of the United States of America is not the only factor that influences the position of the Indonesian rupee. The Indonesian rupee is highly dependent on inflationary processes in the economy of the state. In addition, the situation of rupee depends on Indonesia's gross domestic product, growth or decline in production, liquidity, and the situation in the country's main financial institutions. Also, the rupee exchange rate is influenced by periodic crisis events in the country itself and in South-East Asia.

Rupee exchange rate maintenance tools

The Central Bank of Indonesia uses several instruments to maintain a stable exchange rate of the national currency. The traditional way is to purchase surplus Indonesian rupee, which leads to a deficit and, accordingly, the growth rate of the national currency. In addition, the financial institution also uses such a mechanism as increasing the liquidity of the domestic banking system.

It should be noted that the Central Bank of Indonesia has the opportunity to change the interest rate of refinancing, based on the situation in the markets. Given the ineffectiveness of all the leverage of the main financial institution of Indonesia, it is necessary to resort to the help of international organizations. For example, the International Monetary Fund. To date, the Government of Indonesia has twice used this prestigious international institution.

The position of the rupee today

In 1998-1999, the Asian countries experienced a major financial crisis. At that time, the Indonesian rupee quotes against the US dollar fell by 30%. The government of Indonesia had to resort to IMF assistance to stabilize the financial situation in the country. Incidentally, the Indonesian rupee is considered to be a freely convertible currency. But, despite this fact, the risks of this monetary unit are among the highest in the world. It should be noted that to date, the Indonesian rupee to the ruble rate is 1 RUB = 214.30 IDR.

Indonesia has not a very developed economy, and the financial system of the state does not differ in reliability and stability. In addition, the national monetary units of the developed countries of the world are not directly tied to the main reserve currency - the US dollar. In this respect, the Indonesian rupiah is very different from other units. In 2013, the government planned to implement a denomination of the Indonesian rupee. The goal was to get rid of unnecessary zeros in the dignity of local currency banknotes. It should be noted that such a procedure is a standard health measure and allows to create conditions of order in the state's monetary system. But such a measure is not a panacea and does not guarantee protection against risks in the future.