Depreciating Currency Adds To Woes Of Indonesian Textile Sector
To add to already existing woes of the Indonesian textile industry, the Indonesian currency Rupiah (IDR) is depreciating constantly against the US dollar.
According to Refinitiv data, the IDR was quoted at 16,187 against one US dollar on April 26, 2024 as against IDR 14,929 per dollar on April 26, 2023, down by 8.42 percent in just 12 months.
This is making imports of crucial raw materials like cotton, textile dyes and chemicals as well as machinery costlier, which is increasing the cost of production and making them uncompetitive.
Imported raw materials account for almost 60 percent of all inputs in the Indonesian textile industry and so a depreciating currency increases the cost of production making Indonesian textiles and clothing costlier.
The Indonesian textile sector is yet to recover from the slowdown in demand from its key export markets and illegal imports of clothing and textiles, which is now being monitored by the government.
“However, for companies in to exports, the depreciating currency nullifies the higher cost of production, but is impacting those selling in the domestic market,” Benny Sutrisno, Chairman of the Association of Indonesian Export Companies (GPEI) said.
