Economist: BI needs to strengthen the domestic foreign exchange market ecosystem to support the rupiah

Jakarta (ANTARA) - Head of Economics at Permata Bank, Josua Pardede, views that Bank Indonesia (BI) needs to strengthen the domestic foreign exchange (forex) market ecosystem to support efforts in stabilising the rupiah’s exchange rate.

Josua, when contacted by ANTARA in Jakarta on Wednesday, explained three policy directions deemed wiser for strengthening the domestic forex market.

First, strengthening the role of primary money and forex dealers as liquidity providers and two-way price makers to increase market depth.

Second, expanding bilateral transactions in local currencies with trading partners so that dependence on the dollar decreases gradually.

Previously, on Tuesday (7/4) at the Indonesia Outlook event, Chairman of DPR RI Commission XI, Mukhamad Misbakhun, assessed that BI’s handling of the exchange rate remains conventional and overly cautious amid increasing complexity.

Misbakhun questioned why BI does not become a forex liquidity provider by securing supply from the start through large contracts and high-level diplomacy to ensure availability in the market remains maintained.

Regarding this, according to Josua, the view that BI’s approach is still conventional and needs to become a forex liquidity provider has an understandable spirit, but is not entirely accurate if taken literally.