JAKARTA (TheInsiderStories) – Governor of Bank Indonesia (BI) Perry Warjiyo optimistic there would be less pressure on Rupiah in 2019, globally and domestically. He said one factor to reducing the pressure on rupiah in 2019 is that the US Federal Reserves (Fed), would not raise its fund rate as many times as this year.
“This year the Fed raised its fund rate four times and next year it plans to raise its fund rate only twice and in 2020 once,” he said at one seminar in Jakarta on Wednesday (04/10).
In addition the global condition is expected to improve in 2019 as portfolio investors would return to the emerging countries to invest, he said. Warjiyo stated, “Global investors would not likely keep cash in their hand. They would return to the market in developing countries including Indonesia.”
He believed, efforts by the government in reducing the current account deficit is expected to begin to show result in 2019, he said.
The local currency was facing considerable pressure until finally depreciating, thereby crossing a new psychological level of Rp15,000 per US dollar on Tuesday (02/10), the weakest in recent years.
Yesterday, the Rupiah continued its slump, weakening to 15,088 per US$1 from 14,988 per US$1. While, the Jakarta Composite Index (JCI) fell 0.1 per cent to 5,868 with foreign investors net sold stocks worth Rp242.3 billion ($16.71 million).
BI Deputy Governor Dody Budi Waluyo quoted by ANTARA on Wednesday, said that the central bank will not remain silent and will continue to stabilize the rupiah exchange rate in the market.
“BI continues to be in the market to stabilize the rupiah, which has come under considerable pressure,” Waluyo noted.
After monitoring the Interbank Jakarta Refraction Spot Rate of the US Dollar (JISDOR) as announced by BI yesterday, the Rupiah weakened 100 points at 15,088 as compared to 14,988 on Tuesday.
According to INDEF economist Bhima Yudhistira, global factors include an increase in the crude oil prices of up to $85 per barrel or a 28 percent jump in the current year caused by reduced supply after the Iranian oil boycott called for by US President Donald Trump.
He noted that domestic factors, including sentiment from the projected economic growth in the third quarter of 2018 is estimated to be 5.1 percent or lower than the second quarter of 2018, which was 5.27 percent. The deflation rate of 0.18 percent in September 2018 also did not offer a positive sentiment.
“The rupiah’s weakening at Rp15,000 per US dollar was one of the factors of JCI’s drop,” Infovesta Research chief Utama Wawan Hendrayana said.
He also rated the Rupiah depreciation also caused concerns among the investor that it will affect the Indonesia Stock Exchange’s performance in the future.