Indonesia: BI to maintain its strategy to defend rupiah

  • Bank Indonesia (BI) has announced it will continue its strategy to defend the rupiah, even though it has been unable to prevent the weakening of the currency, saying that the strategy was still valid.
  • On 8 May 18, the rupiah stood at IDR14,036 against the US dollar, according to BI’s Jakarta Interbank Spot Dollar Rate (Jisdor), or 80 points lower compared to the previous day’s position, which was IDR13, 956.
  • BI Deputy Governor Dody Budi Waluyo said that BI’s plan to defend the currency was still in line with the statement made by BG Governor Agus Martowardojo, which included a possible increase of the reference rate.
  • The increase of the BI’s benchmark seven-day reverse repo rate would be implemented if rupiah continued to weaken and threaten monetary stability, he said.
  • Dody said BI believed that the rupiah’s depreciation was still at a tolerable level, as other regional currencies had also been affected.
  • Separately, BI Senior Deputy Governor Mirza Adityaswara said the central bank would make a decision on whether to increase the rate during the BI’s board of governors meeting on 16 May 18 and 17 May 18.
  • He said the decision would consider a number of factors, including inflation, trade balance and balance of payment.
  • “Of course, we will also consider the flow of capital in the world, the US policy and the [reference] rate in neighbouring countries. If Malaysia, South Korea and Australia increase their rates, we may also adjust our rate,” he added.

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