Successful tax amnesty will bring rupiah to below 10,000: Analyst

Arif Gunawan Sulistiyono

The rupiah will strengthen beyond 10,000 per US dollar, far from the current level of around 13,000, assuming that the tax amnesty program succeeds in repatriating the targeted Rp 1 quadrillion (US$100 billion) of Indonesians’ offshore assets, an analyst says.

The amount of the targeted assets, equals to the current foreign reserve assets kept by the central bank, would clearly leads to massive inflow as the repatriated dollar assets exchanged to the rupiah, said NG Korindo Securities Head of Research Reza Priyambada.

“If all the multi-billion repatriated assets are converted into rupiah, based on general estimation over its value, the rupiah will be significantly appreciated to below 10,000 per US dollar,” he said in an economic discussion in Bali on July 31.

Mandiri Sekuritas economist Leo Putera Rinaldy, however, worried that the steep appreciation in the rupiah exchange due to massive inflows in the tax amnesty program would harm the economy.

“Indonesia needs a stable currency, as Bank Indonesia used to highlight. I believe the tax amnesty effect to the rupiah appreciation will be limited as the central bank will prevent a volatile movement in the currency,” he said.

Both Reza and Leo warned that the multi-billion inflows would create an over-liquidity in the financial market, thus the government and the Financial Service Authority must prepare instruments to absorb the assets and disburse them into the real sectors. (ags)