If the current exchange rate of USD/IDR is at 8,170 rupiah, this is an extremely low figure and does not align with the conditions of Indonesia's foreign exchange market in recent years. To provide some context, the USD/IDR exchange rate typically fluctuates between 14,000–16,000 rupiah per US dollar in recent years (2020–2023). Therefore, it’s possible that:
1. The figure is inaccurate or incorrectly entered: An exchange rate of 8,170 rupiah per US dollar would be an extraordinary phenomenon that has never occurred in modern Indonesian history. This could be due to a technical error, such as misreading data or incorrectly inputting numbers.
2. Data from an unreliable source: If you obtained this information from a specific platform, ensure that the source is official and trustworthy, such as:
- The Bank Indonesia (BI) website,
- Bloomberg,
- Reuters,
- Official trading platforms like MetaTrader or banking applications.
Analysis if USD/IDR Is Really at 8,170
If the figure of 8,170 rupiah per US dollar is indeed accurate, this would be an extraordinary event involving extreme factors such as:
1. A Very Drastic Strengthening of the Rupiah
The Indonesian rupiah would strengthen significantly to levels never seen before. Factors that might cause this include:
- An Extreme Increase in BI Interest Rates: If Bank Indonesia were to raise the benchmark interest rate drastically (for example, doubling the current rate), foreign investors would flood into Indonesia’s financial markets to take advantage of high yields.
- A Large Trade Surplus: If Indonesia records a massive trade surplus (for instance, due to a surge in commodity prices such as crude palm oil/CPO, coal, or nickel), foreign exchange inflows would skyrocket, increasing demand for the rupiah.
- A Significant Reduction in Imports: If Indonesia’s imports drop sharply (for example, due to protectionist policies or a decline in domestic consumption), demand for the US dollar would decrease significantly.
2. A Global Crisis of the US Dollar
A drop in the USD/IDR exchange rate to 8,170 could also result from a sharp weakening of the US dollar globally. Some extreme scenarios that might occur include:
- A Financial Crisis in the US: If the United States experiences a major economic crisis (e.g., a government debt default or a collapse of the banking system), confidence in the US dollar as a global reserve currency would collapse.
- A Shift in the Global Monetary System: If the world moves away from the US dollar as the dominant currency (e.g., due to the rise of central bank digital currencies/CBDCs or the increased use of other currencies like the Euro or Yuan), demand for the US dollar would plummet.
3. Massive Intervention by Bank Indonesia
Bank Indonesia might carry out large-scale interventions in the forex market to strengthen the rupiah. For example:
- Buying rupiah in huge quantities using foreign exchange reserves.
- Selling large amounts of government bonds to attract capital inflows.
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Why This Is Unrealistic?
In practice, an exchange rate of USD/IDR at 8,170 is highly unrealistic because:
1. Indonesia’s Economic Structure: Indonesia still relies heavily on imports of capital goods, raw materials, and energy, all of which require US dollars. Demand for the US dollar will always remain high.
2. Exchange Rate History: Since the reform era (1998), the USD/IDR exchange rate has never fallen below 9,000 rupiah. Even during the pre-monetary crisis period (1997), the USD/IDR rate was around 2,000–3,000 rupiah, but that was a very different economic era compared to today.
3. Global Factors: The US dollar remains the world’s reserve currency, and global demand for it tends to remain stable.
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Steps You Should Take
If you see the USD/IDR rate at 8,170, I recommend:
1. Verify the Data: Ensure that the figure comes from a reliable source and is not a technical error.
2. Contact Your Bank or Broker: If you’re conducting a forex transaction, contact your bank or broker to confirm whether the figure is accurate.
3. Monitor the Latest News: Check news from reliable sources like Bloomberg, Reuters, or the official Bank Indonesia website to understand what’s really happening.
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Are you sure that the figure is correct? If so, please share more details so I can provide a more specific analysis! 😊