Jakarta, CNBC Indonesia – The rupiah exchange rate “raged” in the last trade this week, Friday (18/9/2020), a day after Bank Indonesia (BI) announced its monetary policy. The United States (US), Singapore and Australia dollars were knocked down at once.
Launching Refinitiv data, the rupiah had strengthened by 0.88% against the US dollar to Rp 14,690 / US $. This level is the strongest since last September 2. Prior to today, the rupiah had strengthened for 3 days in a row against the US dollar, but only slightly. Only today the Garuda Currency shot.
Meanwhile, against the Singapore dollar, the rupiah strengthened 0.85% to 10,826.82 / SG $, after previously weakening for 5 days in a row, but the weakening was slight.
The Australian dollar was the next victim, weakening 0.81% to IDR 10,750.86 / AU $. The rupiah previously also weakened for 5 days in a row against the Australian dollar, with a total depreciation of 0.79%. This means that if the rupiah is able to maintain its strengthening until the close of trading, Garuda Currency is able to completely pay for the weakening during this negative period.
The Governor of BI, Perry Warjiyo, announced yesterday afternoon that he would maintain the benchmark interest rate at 4%.
“The meeting of the Board of Governors of Bank Indonesia on 16-17 September 2020 decided to defend BI 7-Day Reverse Repo Rate of 4%, interest rate Deposit Facility of 3.25%, and the interest rate Lending Facility sebesar 4,75%, “said Perry in a statement after the Board of Governors Meeting (RDG) for the September 2020 period, Thursday (17/9/2020).
“This decision is consistent with the need to maintain external stability, amid forecasted low inflation. Bank Indonesia emphasizes the quantity pathway through liquidity provision to promote economic recovery from the impact of the Covid-19 pandemic,” he said.
Perry said that BI will maintain its benchmark interest rate this September by taking into account various things ranging from inflation to the financial system both domestically and globally.
“This decision considers the need to maintain the stability of the Rupiah exchange rate, amidst inflation that is expected to remain low,” Perry said through a virtual press conference, Thursday (17/9/2020).
By maintaining the interest rate at 4%, investment returns in Indonesia will be relatively higher, making it more attractive to investors, especially when global economic conditions begin to rise.
The yield on Indonesia’s 10-year tenor bond stood at 6.926%, while the US bond with the same tenor was at 0.6822%, followed by Singapore at 0.889% and Australia at 0.935%.
So that there is a difference in yield of about 6%, if you invest in Indonesia rather than the 3 countries.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)