A currency war refers to the situation where countries deliberately weaken their currencies in order to boost export and improve the trade balance. Monetary tightening in the USA has given bullish momentum to the US dollar since mide-2013, at the expensive of most other currencies. In that context, Martowardojo sees other currencies competing for competitiveness of their currencies.

After the outbreak of the financial crisis in the late 2000s, various central banks around the globe (in the USA, Japan, UK and the Eurozone) have engaged in programs to increase the local money supply (quantitative easing) in an effort to boost sluggish local economies.

Bank Indonesia repeatedly emphasized that it will not intervene overly in the foreign exchange market to support an unnaturally strong rupiah. Instead, it guards against excessive volatility and lets the currency depreciate in line with its fundamentals. A weaker rupiah is regarded one solution to the country’s wide current account deficit as it makes exports competitive while imports become more expensive. Indonesia’s current account deficit, which is projected to remain around 3 percent of GDP in 2015, is one of the country's financial weaknesses that has undermined investors' confidence in the country hence giving rise to capital outflows.

Martowardojo expects to see the rupiah stabilizing between an average of IDR 13,000 and IDR 13,200 per US dollar for full-year 2015. This year so far, the rupiah averaged IDR 12,911 per US dollar. However, until June the currency traditionally experiences strong depreciating pressures due to dividend repatriation and foreign debt payments (causing high domestic US dollar demand). In the third and fourth quarters of 2015, Martowardojo expects that the rupiah will appreciate to around IDR 12,500 per US dollar. However, most analysts will probably disagree with that projection.

The rupiah depreciated 0.71 percent to IDR 13,385 per US dollar according to the Bloomberg Dollar Index on Monday (08/06) as a US interest rate hike became more likely after the US Labor Department said that the US economy added 280,000 jobs in May 2015 (better-than forecast), while there remains great uncertainty about the Greek debt crisis. On Tuesday (09/06), however, the rupiah had appreciated 0.07 percent to IDR 13,376 per US dollar by 10:25 am local Jakarta time.

Meanwhile, the benchmark stock index (Jakarta Composite Index) plunged a staggering 2.29 percent to 4,900.07 points by 10:40 am local Jakarta time on Tuesday.