Wednesday, September 27, 2023 | 15:32 WIB

The challenges of de-dollarization

Jakarta, IO – The familiar issue known as “de-dollarization” has gathered much attention lately. A tired issue that has found its momentum to resurface. 

Amid a recovering (yet uncertain) economy, the de-dollarization issue holds appeal for players in economic and industrial sectors, particularly in alleviating currency exchange rate risks. 

One of the major challenges affecting the strength and stability of the Indonesian Rupiah is its acute dependence on the US dollar. 

Rupiah movement has always been bullied by the dynamics of the US dollar. Variations in the US dollar exchange rate directly affects the Rupiah exchange rate on global financial markets. It is hardly surprising to note that the Rupiah exchange rate volatility against the US dollar has perpetually been critical, shifting more than 9.2 percent in 2022. 

Extreme and unpredictable exchange rate volatility tends to impact businesses unfavorably. Higher volatility means greater risks and more uncertainty, making predictions a chancy and difficult matter, disrupting otherwise rational business development policies. 

For that reason, most businesses prefer economic stability to high economic growth. 

The issue of de-dollarization is also linked to the inexorably declining economic hegemony of the United States, as heretofore developing countries with new economic powers began to emerge and wield strength. These new powers are naturally attempting to bump US hegemony aside, as the US Government struggles to deal with its own ceaseless economic crises, and an imperiled “petro-dollar”. 


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