BI Governor: We will go 'all out' to maintain rupiah exchange rate stability

Bank Indonesia (BI) Governor Destry Damayanti has emphasised that the central bank will go ‘all out’ to maintain the stability of the rupiah exchange rate.

“We remain optimistic about our economy. We will go all out to maintain the stability of our exchange rate,” she stated during the Bank Indonesia Governor’s Meeting (RDG) in Jakarta on Wednesday.

She explained that monetary policy to safeguard the rupiah does not rely solely on interest rates (BI-Rate), but also includes incentive policies for hedging costs, considering that BI’s current target is to strengthen the external sector.

In this regard, BI has expanded the scope of underlying foreign funding transactions eligible for premium reduction incentives for Sell-Buy Swaps (Swap Jual Lindung Nilai/Swap Beli Lindung Nilai to Bank Indonesia) and Domestic Non-Deliverable Forwards (DNDF). Previously, this only covered portfolio inflows, but now includes foreign loans by banks and foreign direct investment.

Through these measures, the rupiah exchange rate was reported to have strengthened from August to mid-September, despite recent pressures caused by increasing global uncertainty.

“Alhamdulillah, the market response today has been good, with the rupiah strengthening by 55 basis points, reaching the level of Rp17,805 (per US dollar). Therefore, we will continue to closely monitor market movements,” Destry remarked.

Furthermore, she emphasised the importance of strengthening synergy and coordination with the government to maintain the stability of the rupiah exchange rate.

“To encourage exports, we must certainly discuss with the government which leading commodities can be promoted moving forward,” she added.