Advertisement
Opinion | How the US-China currency war will impact Indonesia
- Beijing’s devaluation of the yuan and Trump’s decision to label China a currency manipulator have seen the trade war escalate to a new level
- These actions have roiled global markets and the fallout will also reach Jakarta, pressuring the rupiah and widening its trade deficit
Reading Time:4 minutes
Why you can trust SCMP
The latest round of trade negotiations between Washington and Beijing earlier this month ended badly, with both sides firing a broadside – US President Donald Trump threatened to slap tariffs of 10 per cent on US$300 billion of previously untouched Chinese goods, while Beijing responded by lowering the value of the yuan.
Advertisement
Weakening the Chinese currency to seven to the dollar, its lowest level in 11 years, knocked down financial markets and global commodities. Trump responded in kind by labelling Beijing a currency manipulator, meaning the trade war has now become a currency war.
In his state of the union speech on August 16, Indonesian President Joko Widodo said the country had to be aware of the challenges arising from the US-China trade war.
“We also need to be alert regarding the currency depreciation done by some countries, such as China’s yuan and Argentina’s peso,” he said.
The advent of the currency war has impacted Indonesian financial markets, with the value of the rupiah dropping more than 2 per cent since the trade negotiations earlier this month. Other regional currencies have been impacted too.
Advertisement
Advertisement