The rapid capital inflow into Indonesia made the Rupiah stronger below 14,000 against the US Dollar - Photo: Privacy
JAKARTA (TheInsiderStories) – Bank Indonesia (BI) reported that the movement of the Rupiah is currently more stable, supported by four main factors, said the governor today (01/28). This morning, Rupiah strengthening 0.41 percent or 58 points at 14,035 per US dollar.
Perry Warjiyo explained, the first factor has supporting the strengthening of the Rupiah the investor confidence. This was evident from the continued flow of foreign capital, he adds.
“Foreign capital continues to flow in portfolio investments such as bonds, stocks, and other assets,” Warjiyo said in Jakarta.
The second factor, he continued, was the existence of policy synergies between the government, BI, and Financial Services Authority.
“Various things can continue to support a better economic outlook with stability maintained, including policies that were also issued by the government,” he explained.
Warjiyo revealed, the central bank also coordinated with the government to encourage exports ranging from automotive, electronic, garment and food and beverage products.
“The stakeholders are also preparing further policies for import substitution in both steel and pharmaceuticals,” said the governor.
The third factor that affects the rupiah rate was the growing market mechanism. Now, the market does not only depend on spot or swap, but also Domestic Non Deliverable Forward (DNDF), he stated.
So far, he continued, the volume of DNDF transactions continues to increased. To further support the new instrument, BI ensures that foreign exchange liquidity is available, whether in spot, swap or DNDF.
The fourth factor, said Warjiyo, the resilience of the country from external shock was indeed getting better. Including from the side of the lower current account deficit (CAD).
“The capital account surplus is increasing to the overall side of the balance of payments fundamentals. With a decreasing CAD and the capital account cycle,” he explained.
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