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Do not be surprised! Electronic Goods Prices Will Rise, Dollar Effect

The Rupiah weakened again for four consecutive days against the US dollar. According to Refinitiv, the rupiah exchange rate closed at IDR 15,650/US$ or weakened 0.03% at the end of trading Thursday (9/11/2023).

Today it has weakened to IDR 15,700/US$.
As a result of the further weakening of the rupiah, imported goods are expected to experience an increase in prices. Electronic traders have also indicated that this will happen in the near future.

General Chair of the Electronic Commodity Entrepreneurs Association (Apkonik) Deni Irawan said that this happened due to a number of factors, ranging from production costs to the increase in the exchange rate itself.

“An increase in the value of the dollar against the local currency can cause an increase in the price of electronic goods. An increase in the value of the dollar usually makes production costs for companies that import electronic components or equipment from abroad more expensive. These additional costs then tend to be transferred to consumers in the form of price increases selling, which causes electronic goods to become more expensive for local consumers,” he told CNBC Indonesia, Friday (28/4/2023).

This incident is actually no longer something new, but it has happened several times because basically domestic electronic commodities still require imports from other countries where transactions still use dollars.

“Not only that, the place where the producer of an electronic commodity is imported will certainly affect the price of goods on the market,” said Deni.

However, Deni highlighted that currently there is no intervention or preventive movement from the government to deal with this problem. The government has several options to reduce the impact of rising prices of electronic goods due to the increase in the value of the dollar, such as fiscal policy or the government can adjust import tax policies or offer fiscal incentives to local producers to reduce dependence on imports, so that prices of electronic goods become more stable.

Then currency intervention, namely the government can intervene in the foreign exchange market to stabilize the value of the local currency against the dollar, minimizing the impact of rising prices of electronic goods.

Not to be left behind in trade policy, namely negotiating trade agreements to gain better access to global markets or reducing trade barriers can also help control the prices of electronic goods.

Until the final step, namely subsidies or assistance, the government can provide subsidies to local electronics producers or reduce import duties to reduce production costs and selling prices of electronic goods.

“However, each step has pros and cons and can affect various aspects of the economy. Sometimes these policies need to be considered carefully to ensure their effectiveness without creating new problems in the current economy,” said Deni.

Source: CNBC Indonesia