Tuesday, 23 January 2018

This year, Rupiah will be number one in Asia

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment. Any item or verifiable record that fulfills these functions can be considered as money. (Wikipedia)

A currency, in the most specific use of the word, refers to money in any form when I actual use of circulation as a medium of exchange, especially circulating bank notes and coins. (Wikipedia)

From the Wikipedia, we can say that money is medium to exchange with something and currency is a value of money which we use to exchange with something that have equal value. Every nation have the difference of value which has been arranged by the government to make it equalized. For example, if we want to buy one box cigarette in America, we must exchange it or buy it for 10 dollars. But, if we want to buy one box cigarette in England, we must exchange it or buy it for 7 Pounds. That assumption is 10 dollars are equal to 7 Pounds (10:7). So, we can say even the numbers are different from every nation, but the value are same, but we can make the value of our currency better with the revenues of the nations. If the revenues is higher than the other nation, we can lower the difference. So, we can make 1 dollar are equal to 7 pounds to exchange it for one box of cigarette.

Indonesia have the currency named Rupiah. Right now Indonesian Rupiah (IDR) rank is 43 from 45 nation in Asia (https://www.worldatlas.com/articles/which-are-the-strongest-currencies-of-asia.html). From that data, I must disagree if someone mention that this year, Rupiah will be number one in Asia. I think that was illogical, if we still stay where we are. From forbes.com there are three crucial factor to determine the strength of a currency.
1.       Interest rates. High interest rates help promote a strong currency, because foreign investors can get a higher return by investing in that country. However, the level of interest rates is relative. You've probably noticed that interest rates on CDs, savings accounts and money market accounts are very low right now. So are U.S. Treasury bond rates and the U.S. federal funds rate. Ordinarily, this would weaken the U.S. dollar, except for the fact that interest rates behind other major world currencies are also low.
2.       Economic policies. Tight fiscal discipline and anti-inflationary monetary policies help promote a strong currency. Again, this is all relative--the U.S.has its fiscal problems, but so do many other nations around the world.
3.       Stability. A strong government with a well-established rule of law and a history of constructive economic policies are the type of things that attract investment and thus promote a strong currency. In the case of the U.S. dollar, its strength is further augmented by the fact that commodities are generally traded in dollars, and many countries use the dollar as a reserve currency.
Speaking of stability, that is probably what governments seek for their currencies, more so than strength. A strong currency makes a country's exports more expensive, hurting that nation's trade competitiveness. On the other hand, a weak currency makes imports more expensive, boosting domestic inflation. So the ideal course is to aim down the middle and avoid destabilizing fluctuations. (https://www.forbes.com/sites/moneybuilder/2011/12/01/what-determines-the-strength-of-a-currency/#cdf666f16c6f)

Those three steps are crucial if we want to make our currency (IDR) stronger than any others in Asia. From my opinion the first thing that government must do is to make the economic policies in Indonesia are clear. From the age of Soeharto, Indonesian economy are strong because every five years he govern for total 33 years, he make every plan right on the track. Step by step, he makes it clear and the realization is good. That time, one Dollar equalize to two until five thousand rupiah (if I’m right). If the government make the strit policies to everyone without siding with one party, i think in next ten to twenty years, Rupiah will be number one in Asia.

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