Dollar to stay around Rp 10,000: BI

Dollar to stay around Rp 10,000: BI

Farida Husna, Dow Jones/Jakarta

The U.S. dollar is likely to hover around the 10,000 level against the rupiah until the end of this year, a senior central bank official said on Wednesday.

"The dollar, until the end of the year, will be around Rp 10,000, and if the rupiah weakens, I think that's something normal," Bank Indonesia Senior Deputy Governor Miranda Gultom told reporters.

Miranda said that inflation will remain above 12 percent on- year until the end of this year and will start to ease to single- digit levels by the end of September next year.

At 03:06 GMT, the dollar was at Rp 10,074, a shade above its close on Tuesday at Rp 10,069 due to routine end-month dollar purchases by local firms that service foreign-currency debt obligations.

Indonesia's inflation rate soared 17.89 percent on-year in October from 9.06 percent on-year in September after the government raised fuel prices on Oct. 1.

That inflation surge prompted Bank Indonesia to raise its benchmark interest rate by 125 basis points to 12.25 percent on Nov. 1, sparking concerns that inflation and rising interest rates may choke economic growth.

Indonesia's government has targeted an economic growth of 6.0 percent on year this year and 6.2 percent next year. Last year, the country's gross domestic product grew 5.4 percent on year.

Miranda's projection of an easing to single-digit inflation toward the end of next year echoes that of other senior government officials, who insist that inflation and rising rates won't derail government economic growth forecasts.