Governor of Bank Indonesia (BI) Perry Warjiyo responded to the situation of the rupiah currency which has recently weakened against the US dollar. This is due to external pressure, especially in the US.
“Increasing global financial market uncertainty causes the rupiah exchange rate in September 2023 (until September 20 2023) to point-to-point weakened by 0.98% compared to the level at the end of August 2023,” said Perry in a press conference on the Results of the Board of Governors’ Meeting, Thursday (21/9/2023).
Perry said the main cause of the weakening of the rupiah was global financial market uncertainty triggered by the direction of the US benchmark interest rate policy. Moreover, the US Federal Reverse Central Bank (The Fed) is projected to raise its benchmark interest rate one more time until the end of the year.
“What this really means is that global financial market uncertainty is increasing, the Fed Funds Rate is rising in November, while inflation is falling very slowly. So that’s what makes the dollar very strong,” he explained.
Quoting RTI data, the US dollar exchange rate against the rupiah on Thursday (21/9) strengthened 35 points or rose 0.23% to Rp. 15,407. The US dollar was at its highest level at IDR 15,409 and the lowest was IDR 15,320.
Even so, Perry said that from the beginning of the year or year to date (ytd), the rupiah still strengthened 1.22%. The Rupiah is said to still be better than the currencies of India, the Philippines and Thailand, which each depreciated by 0.42%, 1.92% and 4.03%.
“In the future, BI estimates that the stability of the rupiah will remain maintained in line with investors’ perceptions of the prospects for the Indonesian economy, low inflation and attractive returns on domestic financial assets,” said Perry.
BI admitted that it would continue to strengthen the policy of stabilizing the rupiah exchange rate through intervention in the foreign exchange market, increasing the effectiveness of implementing foreign exchange placement instruments from Natural Resources Exports (DHE SDA), continuing the issuance of SRBI, and maintaining the reference interest rate at the level of 5.75%.
“The focus is on stabilizing the rupiah exchange rate. How to stabilize the rupiah exchange rate? The interest rate staywe intervene and innovate in how we conduct monetary operations,” he concluded.
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