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INDONESIA’S central bank said it’s ready to step in to support the rupiah that’s in its longest losing streak since 2023.
Bank Indonesia (BI) is prepared to intervene in the spot, domestic non-deliverable forwards and bond markets to maintain the balance of currency supply and demand, said Edi Susianto, executive director for monetary management.
Susianto’s comments come with the currency set to decline for a sixth straight day. The rupiah along with other emerging market currencies are coming under depreciation pressure as signs of resilience in the US economy bolster the US dollar.
“Global market developments have been rather unfavourable for EM currencies, including rupiah, due to escalating tensions in the Middle East and recent better-than-expected US jobs data,” Susianto said.
The rupiah weakened as much as 1.3 per cent to 15,685 per US dollar on Monday (Oct 7). The currency had rallied more than 8 per cent in the quarter that ended September on expectations that the Federal Reserve will persist with heavy rate cuts after its recent half percentage point reduction.
BI was seen supporting the currency in early trading, according to traders who spoke on the condition of anonymity as they are not authorised to speak publicly. That was the first time in months that the central bank had intervened in the market.
The Indonesian central bank has ample resources to support the rupiah, with its foreign exchange reserves remaining near a record. The stockpile stood at US$149.9 billion in September, covering 6.4 months of imports and external debt servicing requirements.
The weakness in the rupiah has lifted expectations BI may keep its policy rate on hold at its meeting on Oct 16 after a surprise rate cut in September. BLOOMBERG
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