BI Confident the Rupiah Will Return to the Fundamental Level After the Seasonal Pressure Eases

JAKARTA - Senior Deputy Governor of Bank Indonesia Destry Damayanti, said that pressure on the rupiah exchange rate continued as tensions in the Middle East continued with increasing intensity.

He added that this condition has encouraged the rise in world oil prices and increased global uncertainty.

Destry said that on the domestic side, the seasonal increase in the demand for US dollars also added pressure on the rupiah.

"From the domestic side, the seasonal increase in the need for US dollars such as for foreign debt payments (ULN) and dividend payments as well as the need for the hajj pilgrimage has encouraged an increase in demand for US dollars in the domestic market," he explained in his statement, quoted Wednesday, May 13.

He added that Bank Indonesia is committed to continuing to be in the market through smart intervention policies, both in the spot market, Domestic Non-Deliverable Forward (DNDF), and Non-Deliverable Forward (NDF).

In addition, Destry said BI would also optimize all monetary operations instruments to help mitigate pressure on the rupiah exchange rate.

Ahead of the pressure, BI saw that foreign investors' confidence in domestic portfolio assets continued to improve. This is reflected in the capital inflow, especially to the State Securities (SBN) and Bank Indonesia Rupiah Securities (SRBI) markets, which during April reached Rp61.6 trillion.

According to him, foreign exchange liquidity in the domestic market is still adequate and the growth of foreign exchange third party funds (DPK) at the end of March was recorded at 10.9 percent year-to-date (ytd).

Looking ahead, he said Bank Indonesia estimates that the seasonal pressure will begin to ease so that the rupiah exchange rate can move back to its fundamental level.