JAKARTA (THE JAKARTA POST/ASIA NEWS NETWORK) - While the Indonesian government has appealed to its citizens to think twice before travelling overseas to safeguard the foreign exchange, Indonesians are unfazed by the weakening rupiah, booking tickets to various destinations, from Tokyo to California.
These days, travelling means spending more, as the rupiah has weakened against currencies such as the US dollar, the Japanese yen and the Singapore dollar.
Despite such circumstances, many are still interested in travelling overseas, as travel fairs continue to be swarmed by people seeking cheap tickets for a short escape from their daily routines.
Such enthusiasm was seen during the opening of the Kompas Travel Fair (KTF) at the Jakarta Convention Centre (JCC) in South Jakarta on Friday (Sept 7).
West Jakarta resident Charista Keiko, 23, was looking for the best offer to fly to California, United States, as well as other overseas destinations. She and her sister had secured tickets earlier for a visit to California in October, and were seeking tickets for their parents.
"I've just graduated from college, and before entering the working world, I'd love to travel to the US and stay at my family's residence there," she said.
Keiko said the depreciation of the rupiah had not affected her travel plans. However, she was seeking to exchange her rupiah for dollars before the rate increased any further.
Meanwhile, for 50-year-old Desi Aziz, travelling both overseas and to local destinations is a tradition in her family.
After a nine-day trip to Japan with five family members two months ago, Desi wanted to fly back to Japan again with her family soon.
"The previous trip left a deep impression on us, we love Japan so much - especially my husband. It was not enough so we want to go back," said Desi, who travelled from Bekasi in West Java with her son to attend the fair.
Desi said she loved to hunt for tickets at travel fairs to find the best deals and various options of travel packages and discounts.
"We allocate a budget for traveling every year. It's a tradition and we save money for it," she said, citing that every year her family allocated more than 50 million rupiah (S$4,630) for travel.
The rupiah has slumped nearly 9 per cent against the US dollar this year, and neared 15,000 rupiah per US dollar this week. As of Friday, the rupiah traded at 14,820 rupiah per US dollar, according to Bloomberg.
Further, Bloomberg recorded that the rupiah traded at 134 rupiah per yen and 10,793 rupiah per Singapore dollar as of Friday.
Separately, Tourism Minister Arief Yahya has called on Indonesians to delay overseas travel to help the government safeguard the foreign exchange reserves.
At the same time, he said, the ministry was working to increase tourist arrivals.
"We hope people spend their holidays in the country," said Arief in Jakarta on Friday as quoted by Antara news agency.
He said tourism was the sector expected to boost economic performance amid strong external pressure and the expanding current account deficit, which was currently at 3 per cent of gross domestic product.
Foreign tourist arrivals reached 9.06 million from January to July, more than half of its target for the year at 17 million, according to data from Statistics Indonesia (BPS). The number was higher than the 8.03 million foreign tourists seen in the same period last year.
The KTF has set a transaction target of up to 102 billion rupiah during the three-day event in Jakarta this year, up from 93 billion rupiah last year. It also aimed to attract 35,000 visitors compared to last year's 29,000.
The travel fair, which has appointed private lender Bank CIMB Niaga as its partner, will run until Sept 9 in Jakarta, Surabaya, Medan and Makassar.
Kompas deputy general manager Diana Eka Puspitasari said last year destinations such as Japan, South Korea and Hong Kong were the most popular among visitors.
However, travellers have become more interested in visiting destinations outside of Asia, such as the US, she said.
The continuing pressure on the rupiah has seen Indonesia's foreign exchange reserves decline for seven successive months, but a brighter outlook lies ahead as August saw only a slight decrease compared to earlier months, analysts say.
Bank Indonesia (BI) announced on Friday that foreign exchange reserves stood at US$117.9 billion as of August, a decrease of US$400 million from US$118.3 billion recorded a month earlier.
The decline in August was the lowest on a monthly basis this year, and in stark contrast, for example, to the almost US$4 billion decline in the reserves from US$131.98 billion in January to US$128.05 billion in February.
The latest foreign exchange reserves are adequate to finance 6.8 months of imports, or 6.6 months of imports and the government's external debt payments.
BI stated on its website on Friday that the decrease in foreign exchange reserves in August was mainly because of the government's external debts payments and rupiah stabilisation efforts.
Bahana Sekuritas chief economist Satria Sambijantoro said the relatively small decline in foreign exchange reserves in August was unexpected given the intense pressure on the rupiah last month.
Among the pressures were fears of contagion from the economic turmoil in Turkey, which has seen the country's lira shrivel against the United States dollar, partly driven by investor scepticism about the way Turkish President Recep Tayyip Erdogan has managed the country's economy.
Satria said that BI had been particularly "savvy" in assuring the market that the central bank had been intensifying its intervention to stabilise the rupiah, while in fact, it had allowed market mechanisms to flourish instead.
"Most of the currency intervention pledged by its (BI's) top officials is mostly verbal and moral suasion to boost confidence in the adequacy of the domestic dollar supply - while in reality they sat back to avoid disrupting the market mechanisms," Satria said in a statement on Friday.
He added that the smaller decrease in foreign exchange reserves in August might be an indicator of positive things to come, projecting a rebound going forward.
"We expect the foreign exchange reserves to rebound from here, thus boosting investor sentiment that has been affected by the continual depletion of BI's dollar disposal," he said.
The rupiah slightly appreciated on Friday to 14,884 rupiah per US dollar from 14,891 rupiah seen a day earlier, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).
BI Governor Perry Warjiyo said in Jakarta on Friday that the central bank appreciated businessmen who had brought back and converted their export proceeds in the last two days as well as those who had sold their US dollars, which boosted the rupiah's value.
With a stronger market mechanism in place, Perry said BI had been scaling back its intervention in the foreign exchange market and the sovereign bonds' secondary market.
"With the supply in the [foreign exchange] market continuing to increase, the market mechanism is getting stronger, so the movement of the exchange rate is becoming more of a reflection of the supply and demand in the market," said Perry.
Meanwhile, Eric Sugandi, an economic observer at the Asian Development Bank (ADB) Institute, said the relatively small decline in foreign exchange reserves was partly driven by BI's moves to intensify its foreign exchange swap transactions and the export proceeds that were converted into rupiah.
BI has been intensifying its foreign exchange swap mechanisms for monetary operation and hedging in a bid to supply foreign exchange liquidity to the market.
Eric said the current foreign exchange level was still at a safe level to support Indonesia's economy against external shocks, while the government worked to narrow the current account deficit.
Should the reserves sharply deplete, Eric said BI could activate the US$22.76 billion safety funds under the Chiang Mai Initiative Multilateralization (CMIM) arrangement.