Indonesia: House lawmaker supports rupiah redenomination – 24 Jul 2017

  • A member of the House of Representatives Commission XI overseeing financial affairs, Misbakhun, has called on fellow lawmakers to immediately add the rupiah redenomination bill to the National Legislation Program (Prolegnas) so that it could be immediately passed into law.
  • He said the policy, which would result in the removal of three or four zeroes from the rupiah if passed into law, would affect payment systems but not the value of the currency. Therefore, close coordination between the government and Bank Indonesia was needed so that the process could take place smoothly, he said.
  • The redenomination was also needed because the rupiah exchange rate against the US dollar had reached IDR13,000, a figure that did not reflect Indonesia’s standing as the 16th strongest economy in the world, Misbakhun said.
  • Coordinating Minister Darmin Nasution added that the transition period for redenomination would be one to two years while the entire process could take six to seven years to give business players enough time to make the necessary adjustments.
  • However, he stressed that such a move could only be implemented when the inflation rate was between 3 – 4%, as otherwise, the value of the rupiah could further weaken.

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