The policy to sustain rupiah’s exchange rate looks makeshift. It will take years to improve the current account deficit.
In trying to maintain the stability of the rupiah, the government should be careful about its plan to reduce imports. At a time of high dependency on imported raw materials and capital, averaging 75 percent and 15 percent per year, a hasty policy of controlling imports could lead to an increase in domestic industry production costs.
Efforts to put pressure on imports to conserve foreign currency reserves-which fell from US$131.98 billion in Janu...