The central bank is certain that currency stabilisation efforts will guide the rupiah to reflect fundamental value
[JAKARTA] Indonesia’s central bank is committed to maintaining rupiah stability by using all available instruments “boldly”, including continued intervention in the offshore and onshore non-deliverable forward markets, its governor said on Friday (Sep 26).
The central bank is certain that currency stabilisation efforts will guide the rupiah to reflect fundamental value, governor Perry Warjiyo said, adding that he urged market players to maintain a conducive climate.
“Bank Indonesia is boldly using all available instruments, both in the domestic market through spot instruments, domestic NDF and government bonds purchases in the secondary market, as well as in foreign markets in Asia, Europe and America on an ongoing basis through NDF interventions,” he said in a statement. The rupiah has been under renewed pressure since BI unexpectedly cut policy rates on September 17, a move viewed by the market as bowing to President Prabowo Subianto’s push to accelerate economic growth.
The rupiah touched 6,790 a dollar during early Friday trading, its weakest since April, but the currency reversed course and ended the trading session up 0.06 per cent from the previous day’s close. With an almost 4 per cent drop so far this year, the rupiah is the worst-performing emerging Asian currency.
Global investors have become increasingly nervous following protests in August and the abrupt sacking of respected finance minister Sri Mulyani Indrawati this month. Finance Minister Purbaya Yudhi Sadewa, Sri Mulyani’s successor, told a separate press conference he believed the currency would strengthen further.
“I am confident that the rupiah will return to its fundamental level,” he said, adding he was certain recent government measures to lift growth would attract investors due to better economic prospects.
On the relationship between fiscal and monetary authorities, Purbaya said he got along with monetary policymakers, citing a lunch he just had with Warjiyo and a plan to hold regular meetings.
“So we are close to the central bank and our policies will be highly synchronised going forward. But, we will implement our policies within our respective areas of authority,” he said. REUTERS
