√ Definition of Rupiah Redenomination, Benefits and Risks
Meaning of Rupiah Redenomination, Benefits and Risks - On this occasion About Knowledge will discuss the Redenomination of the Rupiah. Which on this occasion explains the meaning of Rupiah Redenomination, benefits, stages and risks of Rupiah Redenomination briefly and clearly. For more details, see the following article.
Meaning of Rupiah Redenomination, Benefits and Risks
Internationally, there is a less positive perception of the rupiah exchange rate against foreign currencies, especially the US dollar. Because the rupiah is the currency with the largest or worst numbers (in tens of thousands). In fifth position in the world after Iran, Sao Tome, Vietnam and Belarus.
Meanwhile, in ASEAN, the rupiah is in the second worst position after Vietnam Dong. For example, the exchange rate for USD/VND is 22,650 and USD/IDR is 13,335. Meanwhile, other countries' currencies against the US dollar are much better in value with the use of cents after the comma, such as USD/MYR which is 4.282 and USD/SGD which is 1.3660.
So that a rupiah redenomination policy is urgently needed, namely by eliminating the 3 digit numbers in the old rupiah. So that every IDR 1,000 of the old rupiah has the same value as the new IDR 1 after redenomination and the value of the old IDR 500 will later be equal to 50 cents.
Definition of Rupiah Redenomination
The definition of rupiah redenomination is a reduction in the number of digits in the denomination or also the rupiah currency fraction the smaller denomination without reducing the value, purchasing power/also the exchange rate of the rupiah against a price of goods as well service. In addition to being able to increase the credibility of the rupiah currency at the international level so that a better world view of the Indonesian economy.
Benefits of Rupiah Redenomination
The benefits of the rupiah redenomination include:
- For convenience and simplification of the financial recording system for the government, the business world and also the public. Especially the convenience in rupiah calculation techniques.
- To be able to improve the image of the rupiah against other countries' currencies.
Stages of Rupiah Redenomination
In implementing the redenomination of the rupiah, it must go through several stages, including:
Preparation phase
The stages of preparation and ratification of the Rupiah Redenomination Law and also the plan to print new money. Apart from that it is also necessary to carry out outreach and education to the whole community.
Transitional stage
The transition period in which the two currencies are used simultaneously, namely the old rupiah and the new rupiah. At this stage, traders as well as the business world are required to include prices for goods or services in old rupiah and new rupiah (dual price tagging).
stage of the entire transaction
All transactions of goods and services as well as all activities or economic activities must use new rupiah.
Rupiah Redenomination Risk
Below are the risks of rupiah redenomination, namely as follows:
There are perceptions and concerns of the community
There is a perception as well as public concern that this Rupiah redenomination is the same as sanering. It is also feared that many capital owners will convert their rupiah into foreign currency, especially US dollars. Even though the two policies are different, this redenomination only reduces the number of digits without reducing the value of money.
Price increase potential
The potential for price increases, this is caused by rounding up prices excessively as a result of entrepreneurs and traders raising prices at will.
To be able to overcome risks during implementation, a strong legal basis is needed as well as community support. This risk is related to the potential for excessive price increases. So that it will have an impact on increasing inflation, rejection from the community and also the risk of disputes.
Thus the explanation about Meaning of Rupiah Redenomination, Benefits and Risks. Hopefully it can be useful and add to your insight. Thank You.
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