KONTAN.CO.ID - JAKARTA. Indonesia's President Joko Widodo on Tuesday said the recent depreciation of the rupiah exchange rate was still "safe" for Southeast Asia's largest economy and its inflation targets and that his government was drafting tax incentives to boost growth.

Speaking at a seminar attended by investors, Jokowi, as the president is popularly known, warned of a potential for oil prices to soar due to escalating conflict in the Middle East and capital outflows linked to U.S. monetary tightening, which could affect Indonesia's economy.

"If we see the percentage of the depreciation of our currency, it's still safe for the real sector, safe for the financial sector, as well as for inflation," Jokowi said.

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The rupiah has dropped by as much as 4.7% from its last peak in early September, coming under pressure amid investors' risk-off sentiments.

On Tuesday the currency strengthened against the U.S. dollar, but continued to trade near its weakest levels since 2020.

Jokowi said the government is also preparing tax incentives for the property sector, which may include a removal of value-added tax for house purchases.

Finance Minister Sri Mulyani Indrawati late on Monday said the government would come up with policy packages aimed at keeping inflation low, protecting people's purchasing power and supporting economic growth.

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Indonesia's central bank last week unexpectedly raised interest rates to arrest the fall in the rupiah's exchange rate.

The September headline inflation was 2.28%, within Bank Indonesia's target range of 2% to 4%.

Editor: Yudho Winarto