Bank Indonesia (BI) Governor Perry Warjiyo has stated that the\ncentral bank is increasing the intensity of interventions in the foreign\nexchange market to curb the rupiah\u2019s weakening pressure. The exchange\nrate recently breached the level of Rp17,600 per US dollar.<\/p>\n
\u201cWe have increased the dose, conducting forex interventions to\nstabilise the currency because the volatility is significant,\u201d Perry\nsaid during a working meeting with Commission XI of the Indonesian\nParliament, held online on Monday.<\/p>\n
He explained that interventions are being conducted not only in the\ndomestic market but also in overseas markets. This move has resulted in\na decrease in foreign exchange reserves by approximately US$10 billion,\nalthough he noted this only reflects a portion of the interventions,\nparticularly through spot transactions.<\/p>\n
In addition to spot transactions, BI is also conducting interventions\nthrough other instruments such as swaps, hedging, and forwards. Perry\nnoted that the largest portion of interventions actually stems from\nthese instruments.<\/p>\n
Furthermore, BI is adjusting monetary policy operations, including\nthrough the Bank Indonesia Rupiah Securities (SRBI) instrument, which\nhas begun to attract foreign capital inflows after a period of outflows.\nBI is also actively conducting government securities (SBN) market\noperations in the secondary market to maintain liquidity. Last year, SBN\npurchases reached Rp332 trillion, with approximately Rp133 trillion\nrecorded so far this year. This strategy aims to balance exchange rate\nstability with sufficient rupiah liquidity.<\/p>\n
BI is also regulating forex transactions to strengthen stability,\nincluding a gradual reduction of the limit for dollar purchases without\nunderlying documentation, which will decrease to US$25,000 starting in\nJune. Simultaneously, the strengthening of Local Currency Transaction\n(LCT) frameworks is being encouraged, including cooperation with the\nyuan and the expansion of cross-border transactions.<\/p>\n
Perry anticipates that pressure on the rupiah will remain high during\nthe April\u2013June period due to seasonal factors such as dividend payments,\nHajj requirements, and foreign debt repayments. However, he believes the\npressure will ease in the second half of the year, stating, \u201cGod\nwilling, in July, August, and September, the rupiah will\nstrengthen.\u201d<\/p>\n
He emphasised that fundamentally, the rupiah remains undervalued\ncompared to macroeconomic projections. BI forecasts the exchange rate to\nbe within the range of Rp16,200\u2013Rp16,800 throughout 2026, with an\naverage assumption of approximately Rp16,500.<\/p>\n
On the global front, Perry highlighted high interest rates in the\nUnited States, rising US Treasury yields, and geopolitical tensions that\nare driving capital outflows from emerging markets. \u201cThis means there is\ncapital flight from emerging markets to developed nations, particularly\nthe United States,\u201d he explained. This condition has strengthened the US\ndollar and pressured almost all global currencies, including the rupiah.\nBI is responding with a combination of intervention policies, interest\nrate adjustments, and liquidity management to ensure exchange rate\nstability without disrupting the domestic financial system.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bank-indonesia-increases-intervention-dose-to-stabilise-pressured-rupiah-1780907035", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }