TEMPO.CO, Jakarta - Amidst global pressure, a currency swap deal with other countries could help stabilize the exchange rate of the Indonesian rupiah, says Esther Sri Astuti, Executive Director of the Institute for Development of Economics and Finance (Indef).
"I believe a currency swap has its positives, but it's not a long-term solution," Esther tells Antara in Jakarta on Thursday, May 7.
One of the positive impacts of a currency swap is helping to stem rupiah depreciation by strengthening access to foreign exchange liquidity.
A non-dollar financing deal is also expected to strengthen foreign exchange reserves and support transaction needs and foreign debt payments.
"Bolstering liquidity strengthens foreign exchange reserves and ensures the availability of funds for transaction needs or foreign debt payments," Esther says.
According to her, financing diversification also serves as a key to reduce dependence on the US dollar through the use of local currencies in international transactions.
Additionally, a cross-currency swap scheme can also help businesses mitigate the risks of exchange rate and interest rate fluctuations.
Based on Bank Indonesia data, Indonesia's foreign exchange reserves at the end of March 2026 were recorded at US$148.4 billion, which is considered sufficient to support the stability of the external sector and the national financial system.
Meanwhile, the rupiah closed stronger on Wednesday at around Rp17,387 per US dollar after previously closing at Rp17,424 per US dollar.
However, Esther cautions that this policy is not a long-term solution to strengthen domestic economic fundamentals, but merely a "temporary stabilization tool."
She believes that strengthening liquidity and diversifying financing to reduce over-reliance on the US dollar remain the key to boosting economic fundamentals.
Esther believes Bank Indonesia must maintain exchange rate stability through market operations if foreign exchange reserves are deemed adequate.
"Bank Indonesia must also conduct market operations to stabilize the exchange rate, provided that US dollar foreign exchange reserves are sufficient," she said.
Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the government, along with Bank Indonesia, is preparing currency swap agreements with China, Japan, South Korea, and several other countries as a measure to maintain rupiah stability.
Bank Indonesia Governor Perry Warjiyo also stated that BI is preparing several measures to strengthen the rupiah, including intervention in the foreign exchange market and increasing capital inflows, supported by foreign exchange reserves, which are considered more than sufficient to maintain exchange rate stability.
Read: Purbaya to Launch Bond Stabilization Fund, What Is It?
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