Rupiah Weakens, Purchasing Power of Foreign Tourists in Indonesia Set to Increase

Young woman traveler looking for some souvenir at Ubud market in Bali (photo: envato elements)

At the close of trading on Friday, June 21, 2024, the rupiah weakened by 20 points, or 0.12 percent, to IDR 16,450 per US dollar. While this depreciation brings several negative impacts on the economy, it also offers a silver lining. The purchasing power of foreign tourists is expected to increase due to the weakening of the rupiah against the US dollar.

I Putu Anom, a Tourism Professor at Udayana University, explained that the depreciation of the rupiah against the US dollar makes Indonesian products cheaper, thus increasing the purchasing power of foreign tourists (Wisman).

“The purchasing power of foreigners will naturally increase,” said Anom, as quoted by Bisnis on Tuesday, June 26, 2024. This increased purchasing power could significantly boost domestic tourism, making Indonesia a more attractive destination for international visitors.

However, Anom cautioned that the weaker rupiah also leads to higher prices for imported goods, including Indonesian products that rely on imported raw materials. As a result, the government often advises the public to reduce spending or travel abroad during such times.

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“In such conditions, the government usually enforces belt-tightening measures. This means reducing spending or limiting travel abroad because it drains our foreign exchange,” Anom explained.

In response to the rupiah’s depreciation, the Ministry of Tourism and Creative Economy (Kemenparekraf) has urged the public to vacation within Indonesia instead of traveling abroad to minimize the outflow of foreign exchange.

“Those with purchasing power, please vacation in Indonesia. When you vacation abroad, it means our foreign exchange leaks out,” Nia, a representative from Kemenparekraf, said during a press conference at their Jakarta office on Monday, June 24, 2024.

To support this initiative, the government has introduced several travel packages in collaboration with various business operators to attract more domestic tourists (Wisnus). These efforts aim to bolster the local economy and reduce the impact of the weaker rupiah.

Additionally, the current situation presents a golden opportunity for Indonesia to attract more international tourists. Nia highlighted that the government is offering a variety of attractions with diverse segments and affordable luxury to entice more visitors to the country.

“This is the moment when the rupiah weakens to attract more foreign tourists and increase domestic travel. God willing, the rupiah will return to a stable exchange rate,” Nia concluded.

While the weakening rupiah poses challenges, it also opens doors for boosting tourism and strengthening the domestic economy. With strategic measures and promotions, Indonesia aims to turn this economic challenge into a lucrative opportunity for its tourism industry.