BI Lowers Reference Interest Rate, Rupiah Even Closes Weakening

JAKARTA - Today's rupiah is closed in the red zone. The rupiah closed 0.40 percent lower today to a level of Rp 13,750 per US dollar.

On the other hand, Bank Indonesia recently cut interest rates. The central bank cut the BI-7 Days Reverse Repo Rate (BI-7DRRR) to a level of 4.75 percent.

Monex Investindo Futures Head Researcher Ariston Tjendra said that the weakening of the rupiah was due to the possibility of monetary easing by China that was not as big as market players had expected.

"The Chinese Central Bank has only cut 10 basis points," he told VOI.

In addition, he said, there were reports of an increase in cases of the corona virus outbreak outside China, such as in South Korea and Japan.

"The potential for a slowdown in the Indonesian economy due to corona, as analyzed by BI, is also holding back the strengthening of the rupiah," he explained.

Bank Indonesia decided to lower the 7-Day Reverse Repo Rate by 25 basis points to 4.75 percent at the Board of Governors Meeting for the 19-20 February 2020 period.

"The Bank Indonesia Board of Governors Meeting on 19-20 February 2020 decided to lower the BI 7-Day Reverse Repo Rate by 25 basis points," said Bank Indonesia Governor Perry Warjiyo.

Bank Indonesia also decided to lower deposit facility and lending facility rates by 25 basis points to 4.25 percent and 5.75 percent, respectively.

This decline is the first time after the central bank has maintained its benchmark interest rate at 5 percent for four consecutive months or since October 2019.