Hartarto says rupiah unlikely to breach Rp19,000 per US dollar
The currency closed at Rp18,184 per US dollar on October 28, as Bank Indonesia cited Middle East tensions and capital outflows among the pressures.
Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto said on October 28 that he remained optimistic the rupiah would stay below Rp19,000 per US dollar, citing confidence in the country’s macroeconomic fundamentals.
The rupiah ended spot trading at Rp18,184 per US dollar, down 28 points, or 0.15 per cent, from Rp18,156 in the preceding session. Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) was Rp18,183 per US dollar.
Bank Indonesia attributed pressure on the rupiah and other regional currencies mainly to increased tensions in the Middle East. Erwin Gunawan Hutapea, head of its Monetary and Securities Asset Management Department, said the conflict had kept crude prices above US$115 per barrel, increasing potential fiscal risks as expectations of US interest rate rises also grew.
Hutapea said investors’ reduced appetite for risk had strengthened the dollar and driven money out of emerging markets as US bond yields climbed. Domestic pressures included concerns that MSCI could downgrade Indonesia’s equity market status and a seasonal increase in companies’ demand for foreign currency before month-end.
He said the rupiah was performing broadly in line with regional currencies. It had lost 1.15 per cent on a monthly basis, while Indonesia held US$146.3 billion in foreign exchange reserves at the end of September.
Hutapea said Bank Indonesia remained active in managing liquidity. Its stabilisation measures include intervention in spot foreign exchange and domestic and offshore non-deliverable forward markets, alongside government bond purchases in the secondary market.
