People earning US dollars and spending Indonesian rupiah have probably noted the latter currency's steady rebound over the past year with a mild sense of dismay. That, or they may have given up monitoring the exchange rates, resigned to the rupiah's relative strength against the formerly hegemonic reserve currency. Losing ground during the most recent global recession, the rupiah traded at over 12,000 to the dollar early last year. Today it has risen to 9,000.
The rupiah suffered major setbacks during the Asian Financial Crisis of the late 1990s. Its value depreciated from around 2,500 to the dollar in mid-1997 to over 16,000 a year on. This precipitous fall in the currency was one of several factors instigating the fall of Suharto's New Order regime.
That financial crisis drug on much longer for Indonesia than for many similarly stricken regional economies, which recovered more readily on the strength of export-led growth and strong demand abroad in the heady days of the late 1990s. Indonesia's GDP growth only returned to pre-crisis rates of around 6% in 2006. A fluctuating currency has accompanied unsteady economic growth, but exchange rates have usually ranged between 9,000 and 10,000 to the dollar over the past decade.
The most recent global economic recession has been relatively merciful to Indonesia, which sustains large domestic consumption. Striving to be classed among BRIC countries (Brazil, Russia, India and China), Indonesia has not yet managed to distinguish itself as quite that level of export powerhouse.
Whether coming here to travel or do business, inadequate infrastructure will likely prove a greater impediment than your dollars' falling purchasing power. Though you will find that the dollar does not go nearly as far as it did last year.
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