Jakarta (ANTARA) \u2014 Bank Indonesia (BI) says movements in the rupiah\nexchange rate remain manageable following Morgan Stanley Capital\nInternational\u2019s (MSCI) announcement last week of a proposed change to\nIndonesia\u2019s stock-market classification from emerging market to\nstandalone market.<\/p>\n
\u201cSo far, from what we can see, it is still manageable. The\nexchange-rate movements have not been excessive. It briefly weakened\nbeyond Rp18,000 [after the MSCI announcement], but not by much. We can\nstill manage it well. Hopefully, market participants will gradually\ndigest the shock,\u201d BI Head of Monetary and Securities Asset Management\nErwin Gunawan Hutapea said in Jakarta on Friday.<\/p>\n
MSCI announced the proposed reclassification on Thursday (15\nOctober), local time. The market responded with a significant fall in\nthe Jakarta Composite Index (JCI) on Friday (16 October), which dropped\n11.57 per cent.<\/p>\n
Meanwhile, the rupiah stood at Rp18,052 per US dollar on Friday (16\nOctober), according to the Jakarta Interbank Spot Dollar Rate\n(JISDOR).<\/p>\n
Erwin said BI had observed capital outflows from the stock market,\nbut declined to disclose their size. Outflows had also occurred in\ngovernment bonds (SBN) and Bank Indonesia Rupiah Securities (SRBI), he\nsaid.<\/p>\n
To respond to market conditions, Erwin said, BI would ensure that\nrupiah liquidity remained adequate to facilitate transactions in the\nfinancial markets.<\/p>\n
He added that BI could intervene if outflow pressures spread to the\nexchange rate and triggered volatility beyond its tolerance threshold,\nparticularly if foreign-currency supply and demand failed to meet in the\nmarket.<\/p>\n
At its October 2026 Board of Governors\u2019 Meeting, BI kept the BI Rate\nunchanged at 5.75 per cent.<\/p>\n
The lending facility rate also remained at 6.5 per cent. However, the\ndeposit facility rate was raised by 25 basis points to 5 per cent.<\/p>\n
BI said the decision was reinforced by an increase in policy\nincentives for hedging through the Domestic Non-Deliverable Forward\n(DNDF) instrument with BI. The measures are intended to attract foreign\ncapital inflows while maintaining rupiah exchange-rate stability.<\/p>\n
The hedging cost incentives apply to underlying transactions\ninvolving external financing, including portfolio inflows, banks\u2019\noffshore borrowing and foreign direct investment.<\/p>\n
Under the DNDF incentives, the premium reduction has been increased\nfrom 25 per cent to 40 per cent for six-month tenors, and from 30 per\ncent to 45 per cent for 12-month tenors.<\/p>\n
Earlier, at a BI Board of Governors\u2019 Meeting press conference on\nWednesday (21 October), BI Governor Destry Damayanti said the central\nbank continued to monitor risks in the domestic stock market, including\nthe risk of foreign outflows, following MSCI\u2019s announcement.<\/p>\n
Destry said BI had assessed the risks associated with MSCI\u2019s\nproposal. The central bank considered pressure on the rupiah to be\nwithin a relatively normal range, as regional conditions were also\nunfavourable at the time.<\/p>\n
\u201cFor the past two days, we have indeed been discussing very\nintensively how to respond to this,\u201d Destry said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bi-says-rupiah-movements-triggered-by-msci-sentiment-remain-manageable-1792745667", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }