Bank Indonesia Remains Alert on Rupiah Exchange Rate

While the rupiah’s exchange rate has been stable in April, Bank Indonesia will remain alert as domestic and external factors could cause volatility, said outgoing BI Governor Agus Martowardojo in Jakarta on Wednesday.

He said the government usually paid the interest on foreign debt in the second quarter ( Q2 ), while the Federal Reserve would also increase the reference rate.

“In Q1, there was pressure on the current account and the pressure will be [stronger] in Q2,” Agus said as quoted by kontan.co.id.

BI has recorded a current account deficit in every Q2 because of the payment of foreign debt interest both by the government and private entities, he said, adding that dividend payments also occurred in Q2.

He gave the example that in 2017, the current account deficit increased to US$4.8 billion in Q2 from $2.18 billion in Q1, while the primary income balance also increased to $8.38 billion from $7.77 billion.

“We have understood the cycle that there is a payment obligation in Q2. We have learned from the three-time increases of the Federal Fund Rate in March, July and December. BI will coordinate with the government and the Financial Services Authority to help people understand what this means,” he added.

Meanwhile, BI governor-elect Parry Warjiyo, who is now BI deputy governor, said the central bank would be ready to intervene in the market by spending foreign exchange reserves to purchase government paper debt to keep the rupiah’s value stable.

Courtesy : TheJakartaPost
Photo : InfobankNews

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