17 AUG 2018;
The financial crisis in Turkey has created sharp fluctuations in the value of the Turkish Lira and a general weakening of emerging market currencies over the last two weeks. One of the countries that is affected is Indonesia, a large oil producer in Asia. Indonesia, which faces a significant (and growing) current account deficit, has seen its currency weaken significantly this year. A little more than 20 years ago, Indonesia was one of the largest victims of the Asian Financial Crisis. President Joko Widodo, who faces re-election next year, does not want a repeat of that currency crisis, which ultimately led to the resignation of then-president Suharto (after 31 years in office). To support its currency, Indonesia, a former OPEC member, wants to curb its dollar denominated imports. Earlier this week, the minister of Energy and Mineral Resources directed state oil company Pertamina to buy all domestically produced crude oil, including the production from overseas companies like ExxonMobil and Chevron. It is still uncertain if and how this plan will be executed. However, Indonesia is a significant crude oil importer as well as exporter in Asia and in this Tanker Opinion we will discuss the potential implications for tradeflows in the region.
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