TEMPO.CO, Jakarta – Bank Indonesia (BI) is confident that the rupiah exchange rate against the US dollar will soon strengthen away from the Rp16,000 mark amid ongoing global turmoil. The central bank predicts that the rupiah will be stronger next year, trading between Rp15,300 and Rp15,700 per dollar.
BI Governor Perry Warjiyo said the rupiah had weakened by 5.25 percent in April-May 2024 compared to the end of 2023.
“(But) it is still better than the Philippine peso, the Korean won and the Thai baht. For next year, we estimate the range will be Rp15,300 to Rp15,700. The upper limit is slightly stronger,” Perry said during a working meeting with the House of Representatives’ Commission XI in Senayan on Wednesday, June 5.
Perry said that BI continues to maintain the rupiah exchange rate, intervene in the foreign exchange market, and even increase the BI rate and BI rupiah securities to prevent the outflow of foreign portfolios abroad.
“The focus is on securities under one year. We are also working with the finance minister to ensure that long-term SBN (government securities) rates are not significantly affected amid rising interest rates abroad,” he said.
Perry outlined four factors that are expected to improve the rupiah; the first is certainty on the Fed Funds Rate (FFR), which will also provide certainty on foreign capital inflows.
The second factor is that interest rates are now quite attractive, so returns on portfolio investments will also improve. The third factor relates to Indonesia’s economic outlook and indicators that affect foreign capital flows.
The fourth is BI’s commitment to maintain stability in coordination with the government. This includes efforts to strengthen Government Regulation No. 36 of 2023 on Foreign Exchange Proceeds from Exports from Natural Resources Concession, Management and/or Processing Activities (DHE-SDA).
ANNISA FEBIOLA
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