BI and the Ministry of Finance Synchronize Fiscal and Monetary Policies to Strengthen the Rupiah Exchange Rate

FOTO ANTARA

Bank Indonesia (BI) together with the Ministry of Finance (Kemenkeu) strengthened the coordination of fiscal and monetary policies to maintain the stability of the exchange rate or rupiah exchange rate, while supporting national economic growth.

Governor of BI Perry Warjiyo emphasized that the coordination between fiscal and monetary authorities has been very close and will continue to be strengthened to face various economic challenges.

"We continue to strengthen fiscal and monetary coordination and at this time it is indeed focused on how fiscal and monetary are in harmony with each other, mutually reinforcing with their respective authorities. To strengthen joint efforts to stabilize the rupiah exchange rate," said Perry as quoted by ANTARA, Saturday, June 6.

According to Perry, there are two steps agreed upon in strengthening fiscal and monetary coordination to support rupiah stability.

The first step is to increase the attractiveness of the yield of domestic financial instruments to encourage the return of foreign capital inflows (inflow).

"There are two things related to strengthening fiscal monetary coordination to strengthen the stability of the rupiah exchange rate, the first is to increase the attractiveness or yield so that the portfolio of inflows returns. With the increase in foreign interest rates, there is indeed an outflow. There are stocks, SBN and also a small one in SRBI. Therefore, fiscal and monetary agree to jointly increase the attractiveness of the yield so that the inflow returns and supports the stability of the rupiah exchange rate," he said.

The second step is to maintain the adequacy of liquidity in the money market and the banking sector through the management of government cash that is still placed at Bank Indonesia, accompanied by an increase in the remuneration paid by BI to the government.

"Number two is to maintain the adequacy of liquidity in the money and banking markets, by managing government cash at BI but of course there is an increase in remuneration or interest paid by BI to the government. Thus, monetary operations continue to support the stability of the rupiah exchange rate while fiscal operations also support," said Perry.

He added that the synergy that has been built so far will continue to be strengthened sustainably to maintain macroeconomic stability while encouraging national economic growth.

"We agree that we will continue to strengthen the fiscal coordination that has been strong so far, now strengthened and continuously strengthened to support each other, strengthen each other to jointly promote economic growth and macroeconomic stability in accordance with the existing dynamics," he said.

Meanwhile, the Minister of Finance (Menkeu) Purbaya Yudhi Sadewa stated that his party fully supports the strengthening of coordination between fiscal and monetary policies so that the impact on the economy becomes more optimal.

"We will support the central bank, strengthen coordination so that policies are more synchronized so that the impact of policies between monetary and fiscal policies is more significant to the economy," he said.

The strengthening of policy synchronization is expected by him to be able to increase market participants' confidence, strengthen the stability of the rupiah exchange rate, and maintain the momentum of national economic growth.