Raja Ampat, CNBC Indonesia – Bank Indonesia (BI) has been more focused on maintaining rupiah stability in recent times. This is because the movement of the rupiah is in a weakening trend due to uncertainty originating from global sources, especially the United States (US).
“It is important to continue to maintain the Rupiah so that it does not have an impact on society,” said Erwindo Kolopaking, Director of the Economic and Monetary Policy Department (DKEM) of Bank Indonesia during a media talk in Raja Ampat, at the end of last week.
According to his notes, the rupiah almost touched the level of Rp. 16,000, although it has now strengthened to the level of Rp. 15,600. Since the end of last year (year to date) the rupiah has weakened 0.52%, more than in many comparable countries.
ADVERTISEMENT
SCROLL TO RESUME CONTENT
The biggest culprit behind the weakening of the rupiah is the US. High inflation is expected to mean that the US will continue to raise its benchmark interest rate from the current position of 5.25-5.50% or 525 bps since March 2020.
On the other hand, there was an increase in US bonds or US Treasury to the level of 5%. Every movement in this data and the policies of the Central Bank of the Federal Reserve (The Fed) cause shocks, especially in the financial markets.
Erwin explained that when the rupiah weakens too deeply, the effect will be felt on the prices of goods, especially imported goods.
“Indonesia’s imports are very high. If the rupiah weakens for 1-2 months, entrepreneurs will abstain, but if it continues to be high it will affect prices,” he said.
This then becomes the cause of inflation or what is known as imported inflation. High inflation will drain people’s purchasing power.
Photo: Bank Indonesia
Bank Indonesia claims that the movement of the rupiah this year has been better than emerging peers.
Bank Indonesia (BI) has issued various policies to maintain rupiah stability. One of them is raising the benchmark interest rate or BI 7 days reverse repo rate to 6% in September 2023.
“This is expected to attract inflow,” said Erwin. Apart from also issuing new instruments such as Bank Indonesia Rupiah Securities (SRBI) in September and Bank Indonesia Foreign Currency Securities (SVBI) and Bank Indonesia Foreign Currency Sukuk (SUVBI) in November 2023.
“BI is not silent, it is always innovating to come up with new instruments that can make us more agile in dealing with the underpressure conditions,” said Ramdan Denny Prakoso, Director of the Monetary Management Department (DPM) of Bank Indonesia on the same occasion.
BI, continued Ramdan, will maintain the rupiah exchange rate in accordance with fundamentals. BI is always on the market directly monitoring and intervening in the spot, DNDF and government bond markets so that rupiah volatility is maintained.
“We want to avoid weakening too quickly resulting in panic conditions in the money market,” he said.
[Gambas:Video CNBC]
Next Article
Appearance of Containers and Cardboards Containing 10 M of New Money
(haa/haa)
2023-11-13 00:15:42
#Whats #downside #Rupiah #continuing #weaken #BIs #explanation
