BI Boss Reveals Weakening Of Rupiah Due To Risk Of Perception Of Indonesian Fiscal Sustainability

Governor of Bank Indonesia Perry Warjiyo. (Photo: Doc. ANTARA)

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo said the weakening of the rupiah exchange rate was influenced by the impact of the high uncertainty of the global market.

In addition, Perry said, the weakening of the rupiah is also mainly related to the uncertainty of the FFR's decline, the broad strengthening of the US dollar, and the high geopolitical tension.

"From domestic factors, the pressure on the rupiah is also caused by an increase in foreign exchange demand by corporations, including for dividend repatriation, as well as perceptions of fiscal sustainability in the future," he explained at a press conference, Thursday, June 20.

Perry said that the stability of the rupiah exchange rate was maintained in accordance with the policy commitment taken by BI.

The rupiah exchange rate until June 19, 2024 is still maintained, although it was under pressure 0.70 percent (ptp), after in May 2024 it strengthened 0.06 percent (ptp) compared to the exchange rate at the end of the previous month.

Perry said that with this development, the rupiah exchange rate weakened 5.92 percent from the level at the end of December 2023, lower than the weakening of Won Korea, Baht Thailand, Peso Mexico, Real Brazil, and Yen Japan at 6.78 percent, 6.92 percent, 7.89 percent, 10.63 percent, and 10.78 percent, respectively.

In the future, Perry said, the rupiah exchange rate is expected to move stably in accordance with BI's commitment to continue to stabilize the rupiah exchange rate, and be supported by foreign capital inflows, attractively yields, low inflation and good economic growth in Indonesia.

"BI continues to optimize all monetary instruments including increasing intervention in the foreign exchange market and strengthening the pro-market monetary operations strategy through optimizing SRBI, SVBI, and SUVBI instruments," he said.

Perry said BI would also strengthen coordination with the Government, banking, and the business world to support the implementation of instruments for the placement of Natural Resources Export Result Foreign Exchange (DHE SDA) in line with PP Number 36 of 2023.