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The Plunging Rupiah
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princesss



Joined: 28 Mar 2007
Posts: 152
Location: japan/indo/aust

PostPosted: Sun Oct 05, 2014 12:55 am    Post subject: Reply with quote

The rupiah is now back at Rp. 12.200, down more than 5% over recent weeks. Prabowo's decision to scrap democracy at the regional level has spooked investors and stocks have fallen even further than the rupiah. The decision to appoint a 4-time corruption suspect as House Speaker has only made matters worse. Prabowo, the son in law of former President Suharto is already talking about an end to Presidential elections and a return to dictatorship and he has a majority in parliament. There is also a lot of talk of driving out foreign investors, a bit like Hugo Chavez. Most commentators are describing it as a crisis for democracy. Once again turmoil is the order of the day.
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plumpy nut



Joined: 12 Mar 2011
Posts: 1652

PostPosted: Mon Oct 06, 2014 6:42 am    Post subject: Reply with quote

What does the West do? I feel sorry for the Indonesians. As individuals they do not have the capacity to stop the blatant corruption. It's always help us help us and then colonizers go away.
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water rat



Joined: 30 Aug 2014
Posts: 1098
Location: North Antarctica

PostPosted: Mon Oct 06, 2014 9:08 am    Post subject: Reply with quote

princesss wrote:
The rupiah is now back at Rp. 12.200, down more than 5% over recent weeks. Prabowo's decision to scrap democracy at the regional level has spooked investors and stocks have fallen even further than the rupiah. The decision to appoint a 4-time corruption suspect as House Speaker has only made matters worse. Prabowo, the son in law of former President Suharto is already talking about an end to Presidential elections and a return to dictatorship and he has a majority in parliament. There is also a lot of talk of driving out foreign investors, a bit like Hugo Chavez. Most commentators are describing it as a crisis for democracy. Once again turmoil is the order of the day.


I have been out of Indonesia almost two years now, and Bing news here in China doesn't offer much. What's up? Why does Prabowo have a say anyway? Isn't SBY still the president?
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princesss



Joined: 28 Mar 2007
Posts: 152
Location: japan/indo/aust

PostPosted: Mon Oct 06, 2014 12:19 pm    Post subject: Reply with quote

SBY is still president and Prabowo narrowly lost the election to Jokowi, who will be the next president. However Prabowo now has a coalition with a majority of votes in the parliament and their first act was to scrap democracy at the regional level. They have said democracy is too expensive and they will appoint governors themselves. Their new speaker in the House is a 4 time corruption suspect who is under investigation by the KPK for graft. Very worrying. Some members of his coalition are openly calling for an end to elections for the Presidency too because they are "Western imperialism." The markets are getting jittery. The next few months should be interesting to say the least.
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water rat



Joined: 30 Aug 2014
Posts: 1098
Location: North Antarctica

PostPosted: Mon Oct 06, 2014 12:58 pm    Post subject: Reply with quote

princesss wrote:
SBY is still president and Prabowo narrowly lost the election to Jokowi, who will be the next president. However Prabowo now has a coalition with a majority of votes in the parliament and their first act was to scrap democracy at the regional level. They have said democracy is too expensive and they will appoint governors themselves. Their new speaker in the House is a 4 time corruption suspect who is under investigation by the KPK for graft. Very worrying. Some members of his coalition are openly calling for an end to elections for the Presidency too because they are "Western imperialism." The markets are getting jittery. The next few months should be interesting to say the least.


Thank you. And what's the rupiah-dollar rate been like, generally and briefly, over the past year or so, please?
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princesss



Joined: 28 Mar 2007
Posts: 152
Location: japan/indo/aust

PostPosted: Mon Oct 06, 2014 5:10 pm    Post subject: Reply with quote

2013 was a bad year for the Indonesian currency. It broke 10.000 rupiah to the dollar and continued out to 11.000 rupiah and beyond. It even touched 12.000 rupiah at times. By that point it was worth 20% less than a few months before, making it one of the worst performing currencies of 2013. It improved when Jokowi was elected president but since Prabowo got control of parliament, it has started falling again, and stocks have done even worse. The liberal press is now calling it the greatest political crisis since 1998. The country risks a return to chaos.
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water rat



Joined: 30 Aug 2014
Posts: 1098
Location: North Antarctica

PostPosted: Tue Oct 07, 2014 6:52 am    Post subject: Reply with quote

princesss wrote:
2013 was a bad year for the Indonesian currency. It broke 10.000 rupiah to the dollar and continued out to 11.000 rupiah and beyond. It even touched 12.000 rupiah at times. By that point it was worth 20% less than a few months before, making it one of the worst performing currencies of 2013. It improved when Jokowi was elected president but since Prabowo got control of parliament, it has started falling again, and stocks have done even worse. The liberal press is now calling it the greatest political crisis since 1998. The country risks a return to chaos.


Tut tut. Do keep us informed from time to time, thanks.
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Tudor



Joined: 21 Aug 2009
Posts: 337

PostPosted: Tue Oct 07, 2014 9:53 am    Post subject: Reply with quote

I realise no-one has a crystal ball but if you had a reasonably significant amount of money saved up in Indonesia (several grand), would you send it back home or would you keep it here?

I sent a load back home last September as the rupiah was in freefall (still kicking myself for not doing it sooner, that "lost" me a fair bit in exchange) but it seems to have stabilised somewhat over the last few months albeit at a much lower rate than what it was a couple of years back.

I'm just thinking with the current political instability and all...
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jaybet3



Joined: 15 Dec 2010
Posts: 138
Location: Indonesia

PostPosted: Tue Oct 07, 2014 11:20 am    Post subject: Reply with quote

And my Indonesian wife can't understand why I (an American citizen) don't want to buy a house in Central Java. She has no idea of how this negatively impacts me.

How long will it be before they start driving out expats who have retired in Indonesia with their Indonesian wifes. The visa process is already expensive, inefficient and a nightmare to process compared to a country like Malaysia.

We've seen the Minister of Education eliminate learning English in some schools (correct me if I'm wrong) and now a reduction in political freedom: what's next. Will all the islands become like Aceh with their ultra conservative Muslim law?

The dropping rupiah actually gives me a lot more buying power, but I don't feel good about the long term.

Retirement in Indonesia? Questionable.

FYI: I keep my money in CIMB Niaga, a Malaysian bank rather than a nationalist Indonesian bank. It wouldn't be too difficult for the govern ment to freeze / seize the bank accounts of foreigners. I would have no legal recourse if some corrupt nutjob in government declared the "bule" where responsible for some economic crisis and take our money.
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princesss



Joined: 28 Mar 2007
Posts: 152
Location: japan/indo/aust

PostPosted: Wed Oct 08, 2014 2:19 am    Post subject: Reply with quote

In response to Tudor, it really is hard to know. The rupiah is already well below its historical average so it shouldn't be in danger of falling much further but the unknown is Prabowo. Every time he opens his mouth of late he suggests how much he wants to get rid of democracy and drive out foreign investors (presumably so he can take the mines for himself and his cronies) and the stock market drops another 1 or 2 percent.

The other factor to watch is the fuel subsidy issue. Indonesia is now spending more on fuel subsidies than health and education combined and most of it goes to comparatively wealthy car owners. If they raise fuel prices a lot, and there is talk it will be raised by 3000 rupiah in November, that will improve the country's finances a lot and the rupiah may even strengthen but it now seems very likely that Prabowo will try and block the rise.
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memae



Joined: 24 Apr 2012
Posts: 38

PostPosted: Thu Oct 09, 2014 2:59 pm    Post subject: Reply with quote

Wasn't there talk of the consequences for his farce with the election being potential jail-time?

i found it very unsettling that he had so much support. If he'd won, i'd have left.

Hopefully, with the pretty balanced support on both sides (and with it seeming like the growing middle class leans pretty comfortably to Jokowi) it will mean that a lot of people will lose it if Prabowo does actually attempt to go through with any of his nonsense. He's too much of a coward to face people or consequences.
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Tudor



Joined: 21 Aug 2009
Posts: 337

PostPosted: Fri Oct 10, 2014 4:53 pm    Post subject: Reply with quote

Thanks for the reply Princess - I bit the bullet today and transferred a load back home. Had I transferred the same amount eighteen months ago, I would have had US$4000 more sitting in my home account Sad

I'm certainly glad I wasn't working here in May 1998 when it depreciated by about 400% overnight. Funnily enough though, I flew to Indonesia on the day of the troubles and upon arrival in Bali I found that my pound sterling now bought me 16000 rupiah as opposed to the expected 4000! I had a ball, but I imagine it was a tough time for a lot of people.
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Listerine



Joined: 15 Jun 2014
Posts: 340

PostPosted: Sat Oct 11, 2014 1:52 am    Post subject: Reply with quote

Tudor wrote:
Thanks for the reply Princess - I bit the bullet today and transferred a load back home. Had I transferred the same amount eighteen months ago, I would have had US$4000 more sitting in my home account Sad

I'm certainly glad I wasn't working here in May 1998 when it depreciated by about 400% overnight. Funnily enough though, I flew to Indonesia on the day of the troubles and upon arrival in Bali I found that my pound sterling now bought me 16000 rupiah as opposed to the expected 4000! I had a ball, but I imagine it was a tough time for a lot of people.


Likewise I was in Jakarta in May '98 with a fistful of dollars and couldn't bring myself to change any of it. Literally every day the rupiah was depreciating 50%. 5,000~USD one day, 7,500~USD the next. You just knew that tomorrow you'd be kicking yourself at changing it at today's rates. It took a long time for the prices to catch up. 'Twas a very good time to be traveling the country. You could live like a king on 3 or 4 bucks a day. One hour domestic flights for $7 etc. I notice when the rupiah started to plunge again back in 2008 the airlines like Lion and Batavia (RIP! Mad) quickly changed their pricing to USD quotes rather than rupiah.
Maybe we met at that time, Tudor....not sure about Bali, but it seemed like there were about 5 tourists ("I'm not a tourist man, I'm a traveler!!") in all of Java and Sumatra. I think I met them all haha.
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Tudor



Joined: 21 Aug 2009
Posts: 337

PostPosted: Sat Oct 11, 2014 4:06 pm    Post subject: Reply with quote

Ha, no, it wasn't me, I was safely ensconced in Bali for the duration except for an unexpected ten hour soujourn at CGK as it wasn't safe for the aircrews to leave their homes / hotels to come to the airport. Also, I'd never be as tossy as to call myself a "traveller" Very Happy

I actually met some teachers in Bali whose schools had evacuated them from Jakarta and it was chatting to them over a few 25p bottles of Bintang (!) that planted the seed for me to become an English teacher. I returned again six months later and noticed that prices had increased significantly (Bintang was now 50p) but it was still a bargain for holidaymakers just as it is now I suppose.
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markustm



Joined: 15 Mar 2010
Posts: 95

PostPosted: Sun Oct 12, 2014 4:12 pm    Post subject: Perspectives Reply with quote

I was in Jakarta during 1998, and things were pretty good for most foreigners who stayed , as long as you weren't on a low paid teaching contract like at EF.

There was always plenty of work, and unbelievably, just after the May riots, one of the main complaints by many Indonesians in Jakarta, was that the shopping malls were closed. They even queued outside Sogo, and Block M, the day after the riots ended.

Nightclubs were also full of Indonesians, despite the collapse of the rupiah, and remained opened, because of the huge demand, which contradicted the terrible economic conditions at the time.

Indonesia's and Asia's economic, and political conditions are very different to 1998, so I doubt anyone can imagine the same scenario happening twice. Although, its always better to spend rupiah, but save another currency, if you have the gut feeling, the rupiah might drop even further.
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