This Is How Bank Indonesia Formulates Policies To Keep The Rupiah From Sluggish

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) is known to continue to take a number of strategic steps to maintain the stability of the rupiah exchange rate, which is currently experiencing a weakening trend.

BI Governor Perry Warjiyo said that his party would not deny that the continued uncertainty brought pressure on the rupiah.

"The Rupiah exchange rate is under increasing pressure as also experienced by other regional currencies, amid the uncertainty of the global financial market that is still high," he said after holding a Board of Governors' Meeting (RDG) quoted on Friday, July 22.

According to Perry, Bank Indonesia will continue to monitor the development of foreign exchange supply and strengthen the rupiah exchange rate stabilization policy.

"This is in accordance with the operation of market mechanisms and their fundamental values to support efforts to control inflation and macroeconomic stability," he said.

BI is also said to have sold Government Securities (SBN) in the secondary market, which is part of strengthening monetary operations.

"The sale of SBN by Bank Indonesia in the secondary market will of course have an impact on increasing yields and this is a separate effort to strengthen the stability of the rupiah value in the financial market," he said.

For information, the exchange rate on July 20, 2022, depreciated 0.60 percent (ptp) compared to the end of June 2022, but with maintained volatility.

The depreciation was in line with the continued high uncertainty in global financial markets due to more aggressive monetary policy tightening in various countries in response to rising inflationary pressures and concerns about a global economic slowdown, amid perceptions of Indonesia's economic outlook that remained positive.

Through this development, the rupiah exchange rate until July 20, 2022 depreciated 4.90 percent (ytd) compared to the level at the end of 2021. This figure is claimed by BI to be relatively better than the depreciation of currencies of a number of other developing countries, such as Malaysia, India, and Thailand.