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Currencies |
| INDONESIAN RUPIAH |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Indonesian rupiah | Weekly
trend of Indonesian rupiah |
| Introduction |
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Rupiah or rupee is the name given to the ancient currency unit
that is still in use in a few Asian countries with most important
among them being India. Etymology suggests the word rupiah means a
silver coin and is derived from the Sanskrit language word "rupyakam".
Indonesia also uses rupiah as its national currency since 1949
when it replaced the Dutch East Indies guilder. It is also called
"perak" locally that again means "silver" in
Bahasa Indonesia language. The currency is depicted with the
symbol "Rp" and the subunit for the currency is known as
"sen". According to ISO 4217 regulation, the currency
code of Indonesian rupiah is IDR and the numeric code for the same
is 360.
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Overview
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Indonesian rupiah is one of the weakest currencies in the world.
The currency faces high fluctuations with even slightest of
movements in the world market and issues like terrorism, oil
prices, domestic sovereign conditions, religious issues,
fluctuations in the US market influence the currency value far too
much. Financial crisis in Asia in 1997 that hit Indonesia worst
among all the Asian countries, terror attacks in Bali in 2002 and
the catastrophic tsunami in 2004 served as a blow to the
Indonesian economy that is still trying to recover from the
aftermaths. Inflation has been a continued risk for rupiah and has
devalued the currency from around Rp 3000 to US$ 1 in the 90’s
till around Rp 9500 to US$ 1 in 2001-02. Some economists believe
that the country should go for outright dollarization of the
currency, leaving the floating rate regime it has been using, as
it would provide it with a much stable currency and a reserve bank
system.
Still, last few years have seen the
Indonesian rupiah making scanty improvements. But it is still
quite an unsafe alternative for investing your money on it as per
the experts. Also, the country has got restrictive plans in
context currency trading plans so as to minimize speculation and
for economic reforms. Anyhow, Indonesian rupiah is a freely
convertible currency, the import and export limits in the case of
local currency being amount of 100000000 rupiah. A declaration is
required in context of foreign currency transfer for amounts
exceeding 100000000 rupiah.
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Structure
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Currently, the rupiah in circulation in
Indonesia is the second version of the currency
ever issued. The first version of Indonesian
rupiah was replaced by the new version @ 1 new
rupiah = 1000 old rupiahs in 1965 due to the
rampaging inflation. The role of central bank in
Indonesia has been performed by Bank Indonesia
since 1953 when it was established, though for a
long time, the powers of the bank were
restricted but the bank redeemed its operations
in 1999. The coinage that circulates throughout
the country includes coins in 6 denominations
that are Rp 25, Rp 50, Rp 100, Rp 200, Rp 500
and Rp 1000. The first issue of coins of the new
rupiah made in 1970 has been totally withdrawn
from the market but the second series issued
from 1991 till 1998 is still in circulation
along with the current series issued 2003
onwards. The obverse sides of all the coins
depict the national symbol, garuda, a mythical
bird with outstretched wings. The obverse sides
of the coin possess different symbolic images
embossed on them, mentioned in details below
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Rp 25 - Pala fruit
- Rp
50 - Kepondang bird
- Rp
100 - Kakatua raja
- Rp
200 - Balinese Jalak bird
- Rp
500 - Jasmine flower
- Rp
1000 - Oil palm
The bank notes too, are
available in two forms in the Indonesian market,
one belonging to the 1998-2001 series and other
belonging to the current 2004-2005 series. The
notes prior to 1997 had been withdrawn from the
economy. The denominations printed on paper
currency sums up to 8 denominations with their
respective predominant colors are Rp 100 (Red),
Rp 500 (Green), Rp 1000(Blue), Rp 5000 (Green),
Rp 10000 (Purple), Rp 20000 (Green), Rp 50000
(Blue) and Rp 100000 (Red). They show images on
both their sides symbolizing the tradition and
culture of Indonesia as well as the important
people related to the history of the country.
The list below is provided with the details of
the images
The bank also issued
plastic money in the recent past, first one in
1993 celebrating the silver jubilee of economic
development, second one in 1999 having face
value Rp 100000 to eliminate counterfeiting of
the paper currency but the bank notes didn’t
get any popular due to difficulty with counting
of the notes by the counting machines.
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| History |
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Before Indonesia became an European colony, coins made
of gold, silver, bronze and tin prevailed under the
influence of Indianized kingdoms, Chinese and Arabs as
the currency used in daily exchange transactions.
Imported Chinese bronze coins served as the official
currency of Indonesia in the 13th century. The coming
up of the European troops in Indonesia made way for a
number of currencies that were brought from various
countries of the world including gold coins from
Portugal, silver dollars from Mexico and Peru,
Japanese gold coins and Indian rupees. The Dutch
occupied the country and renamed it as Netherlands
East Indies in the beginning of the 17th century. The
East Indies adopted guilder as its official currency
and Netherlands had to make special issues of currency
for its colony. Guilders were divisible in 30 stuyvers
and 120 duitens.
The other currencies like Spanish
silver dollars and Indian rupees continued to
circulate along with the guilders. In 1828, the
Javasche bank was established and in 1854, guilder was
made to adopt cent as the decimalized subunit of the
currency. The guilder sustained to be the national
currency till 20th century and in 1936, the currency
dropped the gold standard. In 1942, during the World
War II, Japan took over the Dutch colony and issued
its own Military yen, which was denominated in
guilders but it got stuck in the inflation flow and
depreciated drastically. Guilders were taken over by
rupiah as the national currency but even it didn’t
help the cause and continued to depreciate. After the
world war was over, Indonesia declared their
independence in 1946 but officially it became free in
1949.
Till 1949, all other currencies
were withdrawn from the economy and the Indonesian
rupiah prevailed throughout the country. Still, the
old rupiah had not escaped from inflation and
devaluation and as a result in 1965, it was replaced
by the new rupiah @ 1 new rupiah = 1000 old units of
old currency. Also, some Indonesian provinces as Riau
Archipelago and Irian Barat were using different
currencies i.e. Kepulauan Riau rupiah and Irian Barat
rupiah before the coming up of new rupiah but were
replaced by the Indonesian rupiah in 1964 and 1971
respectively.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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