This Is The Cause Of The Rupiah Strengthening Trend According To The Governor Of BI

The Governor of Bank Indonesia (BI), Perry Warjiyo. (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo said the rupiah exchange rate strengthened against the US dollar, supported by Indonesia's improving economic prospects amid global economic turmoil and the risks of a world recession.

"I continue to repeat that the rupiah will strengthen after global turbulence is somewhat low, we see now our rupiah is below IDR 15,000 per US dollar because all of our fundamentals support strengthening our rupiah," Perry Warjiyo said at the BI Annual Investment Forum 2023, quoted from Antara, Thursday 26 January.

Indonesia's economic prospects are getting better, he continued, as shown by good economic growth, low inflation, attractive returns, a surplus running balance in the third quarter of 2022, increasing foreign investment immediately, and a surplus balance of payments.

The rupiah in early 2023 experienced appreciation, which until January 18, 2023 rose 3.18 percent point to point and 1.20 percent on average compared to the level in December 2022.

In recent days, the rupiah exchange rate is still below IDR 15,000 per US dollar. The rupiah on Thursday morning (26/1) moved to IDR 14,977 per US dollar compared to the position at the close of the previous trade on Wednesday, January 25, IDR 14,965 per US dollar.

Meanwhile, on Tuesday, January 24, the rupiah closed sharply increasing 188 points or 1.24 percent to IDR 14,888 per US dollar compared to the position at the close of trading on Friday, January 20, IDR 15,075 per US dollar.

The strengthening of the rupiah was driven by foreign capital inflows into the domestic financial market in line with investor positive perceptions of domestic economic prospects that remain good with maintained stability, yields of attractive domestic financial assets, and uncertainty in the global financial market slightly eased.

There was a net foreign capital flow of IDR 14.8 trillion in the period 16-19 January 2023, the majority of which entered the Government Securities (SBN) market.

Sejak 1-19 Januari 2023 tercatat aliran modal asing masuk bersih Rp36,33 triliun di pasar SBN, namun terdapat modal asing keluar bersih di pasar saham senilai Rp7,94 triliun.

Thus Perry Warjiyo said that the stability of the rupiah was maintained amidst the strengthening of the US dollar and the high uncertainty in global financial markets.

Improved domestic economic data also supports strengthening the movement of the rupiah against the US dollar. The value of Indonesia's trade balance in 2022 set the highest record with a surplus of US$54.46 billion.

Indonesia's foreign exchange reserves at the end of December 2022 reached USD 137.2 billion, an increase compared to the position at the end of November 2022 of USD 134 billion.

The position of foreign exchange reserves is equivalent to financing six months of imports or 5.9 months of imports and payment of government foreign debt and is above the international adequacy standard of about three months of imports.

Investment realization throughout 2022 reached IDR 1,207.2 trillion, exceeding the target of IDR 1,200 trillion set by President Joko Widodo (Jokowi) with a total workforce absorption of 1,305,001 million people.

Indonesia's current account balance in the third quarter of 2022 recorded a surplus of US$4.4 billion or 1.3 percent of Gross Domestic Product (GDP), higher than the previous quarter's achievement of US$4 billion or 1.2 percent of GDP.

Indonesia's current account balance in the third quarter of 2022 recorded a surplus of US$4.4 billion or 1.3 percent of Gross Domestic Product (GDP), higher than the previous quarter's achievement of US$4 billion or 1.2 percent of GDP.

The policy of stabilizing the rupiah exchange rate to control inflation of imported goods is strengthened by foreign exchange monetary operations, including the implementation of instruments in the form of foreign exchange deposits from the Export Result Foreign Exchange (DHE) according to market mechanisms.