INDEF economist Eko Listiyanto said the rupiah`s movement next year will be affected by the tightening of US monetary policies as well as the government`s tax reduction by Donald Trump.
He noted that both policies will have implications on the increase in capital outflow, and precautionary measures should be taken by strengthening the fundamentals of the domestic economy.
"If the US succeeds in improving its economy, our economy will depreciate," Listiyanto stated here on Wednesday.
Meanwhile, the 2018 simultaneous elections will impact the perception of investors in the money market against economic stability.
In addition, the development of data on the economy, especially relating to the risk in the state budget, macroeconomy, and purchasing power will determine the fluctuations in the rupiah exchange rate in the country.
In general, the rupiah is forecast to fluctuate more in 2018 than in 2017 based on the development of economic and political policies at the global level, especially the US monetary and fiscal policy.
"Bank Indonesia (BI) will need to intervene by making additional efforts to realize the target of Rp13,400," he pointed out.
Based on BI`s middle rate, the rupiah exchange rate on Wednesday reached Rp13,515 per US dollar, up from Rp13,527 compared to the previous day.
The government had earlier set an economic growth target of 5.4 percent in the 2018 Draft State Budget (RAPBN) to be achieved through the support of public consumption, increased investment, and improved export and import performance.
President Joko Widodo made the remarks while delivering the Government`s RAPBN 2018 and its Financial Notes during the House of Representatives` plenary session at the Parliament building in Jakarta on Wednesday.
On the occasion, the president also elaborated on the government`s macroeconomic indicators in the RAPBN 2018. It has set the inflation target at 3.5 percent, exchange rate of the rupiah currency at Rp13,500 per US dollar, interest rate of three-month treasury bills at 5.3 percent, average price of Indonesian crude at US$48 per barrel, oil lifting at 800 thousand barrels per day, and gas lifting at 1.2 million barrels of oil equivalent per day.
According to the president, by 2018, development will be directed to boost the economic growth in the regions of Maluku, Papua, Kalimantan, Sulawesi, Bali, and Nusa Tenggara by increasing connectivity to Java and Sumatra, which have been the biggest contributors to the national economy.
The improvement and development of infrastructure, both connectivity and energy availability, are the key to the efforts to realize economic equality.
In addition, the development of border areas is the government`s priority, with the hopes of these regions becoming the gateway for international trade transactions in order to improve the economy in the border areas and the national economy, as a whole.
The government, on Wednesday, announced the 2018 Draft State Budget, with revenues of Rp1,878.4 trillion, state expenditures of Rp2,204.4 trillion, and a budget deficit of approximately Rp325.9 trillion, equivalent to 2.19 percent of the gross domestic product.
According to the president, from the total revenue of Rp1,878.4 trillion, tax revenues are planned at Rp1,609.4 trillion and non-tax state revenues at Rp267.9 trillion.
Meanwhile, the state expenditure is set at Rp2,204.4 trillion comprising central government expenditures amounting to Rp1,443.3 trillion and transfer of fund to regions and villages amounting to Rp761.1 trillion.