Jokowi Says Rupiah in ‘Good Position’ as It Hits Four-Year Low
(Bloomberg) -- Indonesian President Joko Widodo has shrugged off concerns about the rupiah’s recent bout of weakness, signaling there may be little political pressure for the central bank to raise interest rates next week.
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The rupiah at 16,200-16,300 against the US dollar — its trading range for much of June — is “still in a good position,” Jokowi, as the president is known, told reporters late Monday. The rupiah’s depreciation is in line with other currencies, as “all countries are experiencing the same thing, pressured by the dollar,” he said.
The president’s comments are in sharp contrast to Indonesia’s stance in April, when all of government was put on alert to help stem a currency rout. State firms were instructed to hold off from making large dollar purchases, while exporters were urged to repatriate their foreign-currency earnings. Bank Indonesia also delivered a shock rate hike in April, taking the benchmark to 6.25%.
This time, Bank Indonesia signaled more confidence. The rupiah should remain manageable and stay stronger than 16,300 per dollar, said Edi Susianto, the central bank’s executive director for monetary management, on Tuesday.
The central bank reiterated that it will continue its efforts, including market intervention, to stem capital outflows and steady the rupiah. Ample dollar supply from exporters and foreign fund inflows should also support the currency, Susianto added.
With authorities appearing less rattled by the rupiah, the central bank may be less likely consider raising the BI-Rate when it meets on June 20, and instead opt for other measures to ride out the volatility.
The rupiah has slumped 2.6% this quarter to a four-year low. It’s facing renewed pressure amid seasonal dividend payments and Hajj pilgrimage outflows, coupled with a selloff in emerging markets amid uncertainty over the Federal Reserve’s policy path.
--With assistance from Matthew Burgess and Grace Sihombing.
(Updates with Bank Indonesia’s comments in fourth and fifth paragraphs.)
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