JAKARTA. The rupiah exchange rate on Monday morning had weakened by 122 points to Rp 14,038 per US dollar from Rp 13,916.
NH Korindo Securities Indonesia head of research Reza Priyambada said that the US dollar had appreciated again against the majority of Asian currencies on Monday morning as there was a possibility that the US Federal Reserve (Fed) would increase its fund rate in September.
“Although it is doubtful that the Fed will increase its fund rate considering that the global economy has continued to slow down, market players are still wanting accumulate US dollars,” he said as quoted by Antara in Jakarta on Monday.
Reza said he hoped that Bank Indonesia’s policy of preventing further weakening of the rupiah could garner a positive response from the market to avoid the domestic currency being suppressed deeper.
He said that the central bank had attempted to prevent the rupiah from weakening further by, among others things, intervening in the foreign currency markets to control the volatility of the rupiah and buying treasury notes (SBN) in the secondary market. At the same time BI has continued to pay close attention to the possible impacts of its actions on the availability of SBN for inflow and on the liquidity of the currency market.
The analyst further said that BI had also strengthened the rupiah’s liquidity management by conducting an open market operation to shift the liquidity to a longer maturity period and adjusting the frequency of foreign exchange swap auctions from twice a week to once a week.
The central bank had also changed the auction mechanism of foreign currency term deposits from “variable rate tenders” to “fixed rate tenders”, conducted price adjustments and extended the maturity period by up to three months, he added.
Reza said BI had also lowered the limit on certain channels of foreign currency purchasing from US$100,000 to $25,000 per customer per month and required the use of individual’s tax cards (NPWP) to do so. The bank also had coordinated with the government and other central banks to strengthen the country’s foreign exchange reserves.
Samuel Sekuritas economist Rangga Cipta predicted that BI’s stabilization policy would be helpful in preventing rupiah assets from declining further although foreign outflows were also quite difficult to prevent.
“For the time being, it is predicted that the rupiah will remain under pressure,” said the analyst. (ebf)