Check Out BI Governor Perry Warjiyo's Explanation Regarding The Impact Of Russia-Ukraine Tensions On The Indonesian Economy

Illustration (Photo: Doc. Antara)

JAKARTA - The Governor of Bank Indonesia (BI) Perry Warjiyo gave his views regarding the escalation of tensions that continue to peak between Russia and Ukraine on the Indonesian economy. According to him, the situation is one of the external factors that need to be watched out for.

"All of this that is happening globally, whether it's geopolitical tensions, whether the acceleration of the normalization of the Fed's monetary policy and also the plan to normalize monetary policy in Europe will of course have an impact on financial markets," he said when giving an online press statement, Thursday, February 10.

According to Perry, the global situation will continue to be filled with uncertainty amid the threat of the COVID-19 pandemic. In fact, he views that what is happening today can create dynamics in capital flows to Indonesia and other developing countries.

"The impact on Indonesia and other emerging markets is of course on foreign capital flows, particularly in the form of fixed income, human resources, and exchange rates," he said.

Perry added, in addition to normalizing the Fed's policy, European countries will also do the same in response to the current economic situation. However, the BI boss assessed that the pressure could still be maintained considering that the countries that would be affected were already prepared.

"Here, BI sees that the impact on the exchange rate will not be as significant as it used to be," he said.

In his analysis, the normalization of monetary policy in the US and Europe will strengthen foreign exchange rates, especially from developed countries. Although Perry admits that the rupiah has the potential to weaken, he said that the pressure can still be managed properly.

"However the impact on the weakening of the rupiah exchange rate, it will be controlled because fundamentally, technically, the rupiah is strong which is supported by BI's strategic steps," he stressed.

For information, on this occasion Perry predicted that the Fed would start raising interest rates from March 2022 until the end of the year. He said that the US central bank is believed to be raising the Fed Fund Rate by 100 basis points in four stages of increase this year.