The window could be closing for Indonesian shoppers, though, with the median estimate of analysts surveyed by Bloomberg suggesting a drop in the nation’s currency to 13,950 per U.S. dollar by year-end.
Import Taxes
At the Paragon Mall on Singapore’s premier Orchard Road shopping strip, Andy Susanto, who runs a manufacturing and trading company in Jakarta, said the strengthening rupiah and improving economy are encouraging Indonesians like himself to shop in the city-state, where items were cheaper because of import taxes on luxury goods at home. A medium-sized Capucines handbag was selling for S$6,550 ($4,846) at a Louis Vuitton store in Singapore on Tuesday, around 20 percent cheaper than in Jakarta.
The rupiah is benefiting from 82.84 trillion rupiah ($6.2 billion) of inflows into Indonesia’s local-currency sovereign bonds since the end of September after inflation slowed from 6.83 percent to 4.42 percent and Bank Indonesia cut its benchmark rate three times in a row this year. The nation’s 10-year notes yield 7.7 percent, the highest among Asia’s emerging markets.
The recent recovery comes after the currency plunged 34 percent against the greenback in the four years through 2015 as commodity prices tumbled and the Fed unwound its stimulus program.
Affendi Heru Pranoto, a businessman from Solo in Central Java, said the weak rupiah meant he’d opted to spend most of his holidays in Indonesia in recent years. As the currency had clawed back some of its losses, he’d decided to take the family overseas for Easter. His wife found it cheaper to buy children’s clothes at the Mothercare outlet in the Paragon Mall than at home, he said.
“Compared to five years ago, it’s still relatively expensive to go abroad,” said Pranoto as he ran after his toddler at a playground in the mall. “But the rupiah’s recovery has helped. That’s why we’re in Singapore.”