BI: Rupiah Has Comes Out Its Fundamental Level

Finance Minister Sri Mulyani Indrawati Give an Explanation to the Media on the 2019 State Budget at the Parliament Building on Tuesday (04/09) - Photo by Finance Ministry Office

JAKARTA (TheInsiderStories) – Is not an easy for the economic leaders to determine the volatility in the financial market amid the global economic turbulences. The sell-off in emerging market currencies and the escalating global trade tensions have sparked demand of the greenback.

On Tuesday (04/09), Indonesian Rupiah almost touched Rp15,000 level at 6:12 pm local time, a level not seen since 1998 when Indonesia’s economy hit by a financial crisis.

Yesterday (04/09), in the meeting with Budget Committee of the Parliament, Governor of Bank Indonesia (BI) Perry Warjiyo said that the Rupiah has come out of its fundamentals.

According to him, the weakening of the Rupiah was largely influenced by the negative sentiments from global side like United States’ Federal Reserves planned to raise its benchmark rate, pressure from Argentina and Turkey’ financial crisis and trade war issues.

While from domestic side, the foreign exchange purchased by corporate to pay the debt and for import things has bring a pressure to the Rupiah.

To prevent the rupiah from falling further, he said, the central bank continues enter the market and increase the intervention volume, both on the foreign exchange market and on the debt market. So far, BI has spend RP7.1 trillion (US$489.66 million) for the monetary actions.

In the same day, Finance Minister Sri Mulyani Indrawati told the parliament that the government is committed to continue its policy to reduce imports and push for more exports to bring more foreign exchange revenues to the country. She admitted the global pressure could affect market sentiment and Rupiah stability.

Setting of the Rupiah rate in 2019′ State Budget is a challenge cause is not only reflect the fundamental factors but also the anticipatory towards the volatile market sentiment, Indrawati said. In the 2019, the government determines the Rupiah level against the greenback at Rp14,400.

She continued, the government will also continues to strengthen the economic structure by improving the manufacturing industry sector to generate foreign exchange revenues to make the trade balance and current account become strong.

Meanwhile after met President Joko Widodo at the State Palace, Coordinating Minister for Economic Affairs Darmin Nasution asserted that the fundamental of the country’ economy remain robust amid the current fluctuations on the local currency.

He noted that the government had improved the performance of the real sector, including tourism, mining, and industry, in a bid to reduce the current account deficit.

Nasution called on the public to not compare the current depreciation of the Rupiah with the monetary crisis in 1998 situation, which the local currency was dropped sharply to around Rp14,000 against the American dollar.

“Don’t compare the current rate with the situation 20 years ago,” complained the minister. He emphasized that the government`s macro economic policies are still effective to be implemented.