Rupiah slump not caused by unchanged BI rate: Central Bank

Rupiah slump not caused by unchanged BI rate: Central Bank


Jakarta — Bank Indonesia (BI), Indonesia’s central bank, has rejected some reports of the current depreciation of the rupiah being caused by unchanged BI rate, or officially called the “7-Day Reverse Repo Rate” in July. BI’s Deputy Governor Erwin Rijanto denied claims that the rupiah had weakened on Friday (20/07)  owing to a negative response from the market after the central bank decided to the BI rate at 5.25 percent during a meeting of the board of governors on Thursday. The BI had raised the rate up to 100 basis points in the last two months. “If we look at it from a broader perspective, it is not only that has depreciated today but also other currencies,” Rijanto pointed out. Rijanto noted that an improvement in the U.S. economic data had strengthen the U.S. dollar and widely impacted the depreciation of currencies of developing economies, including the rupiah. According to the Jakarta Interbank Spot Dollar Rate on Friday, the rupiah had opened at Rp 14,250 per U.S. dollar, or weakened 102 points, from Rp 14,418 per U.S. dollar on Thursday. Echoing Rijanto viewpoint, senior analyst of CSA Research Institute Reza Priyambada remarked that the rupiah will continue to weaken, following an appreciation in the U.S. dollar, supported by the market’s positive response to the Federal Reserve’s Gerome Powell’s statement on the U.S. economic growth. This occurred despite his lack of detail on the Fed’s monetary policy,” Priyambada reported. In his remarks, Powell stated that the U.S. economy will remain stable and implied that the Fed had a plan to hike its rates on two other occasions in the second semester of 2018. The Fed had raised its rate twice during the January-July period.