Bank Indonesia intensifies market intervention as IDR tumbles

• Coordinating Economic Minister Darmin Nasution has said the IDR’s weakening to IDR14,700 per USD on 31 Aug was purely because of external factors, particularly the plunge of the Argentinian currency.
• He said the Argentinian crisis had weakened nearly all currencies in Southeast Asia and other developing countries.
• Darmin said the IDR’s exchange rate would still be under pressure from the normalization of American monetary policy, which is expected to increase its reference rate by 1.5% up to 2019.
• However, he stressed all pressure on the IDR was external. “There is no internal pressure,” he added.
• In response, Bank Indonesia (BI) is intensifying efforts to stabilise the IDR. BI Governor Perry Warjiyo said the central bank was upping the ante of its dual intervention policy in both the foreign exchange and secondary bond markets in an effort to stem the IDR’s further depreciation.
• The central bank has bought bonds worth IDR3tr that was sold by foreign investors as of 31 Aug 18. Perry added that BI targeted to lure at least USD400mn from its daily foreign exchange swap auction on 31 Aug 18 in a bid to provide some relief for the IDR.
• Perry added that the central bank would continue to monitor the latest developments in the global economy, particularly the economic turmoil in other emerging markets such as Argentina and Turkey.
• He said the Indonesian economy was still resilient as indicated by low inflation and stable economic growth, supported by the government’s strong commitment for structural reforms.

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External Link: http://www.thejakartapost.com/news/2018/08/31/rupiah-weakening-purely-due-to-external-factors-darmin.html