BI optimistic about strengthened
rupiah in 2014

Bank Indonesia (BI) said it was optimistic that the rupiah would strengthen if inflation and imports were both controlled, along with greater certainty over the US Federal Reserve's tapering policy and a well-run 2014 election.

“We are optimistic that the rupiah exchange rate will go up next year,” said BI spokesperson Difi A.Johansyah in Bandung, West Java, on Sunday, as quoted by Antara.

He said if the rupiah continued to weaken to around 12,000 per US dollar, this would not be surprising for the time of year.

“At the end of year, the currency rate tends to fluctuate and, in fact, Rp 12,000 per US dollar is already ‘undervalued’,” Difi said.

The central bank predicted that the rupiah would improve by the end of the first half of 2014; and by the start of the second half of the year at the latest. Difi added that by then, the rupiah would strengthen to less than 11,000 per dollar.

He also said Indonesia’s non-oil and gas exports had shown some improvement as the US and China’s economies had started to move again, so encouraging a rise in imports.

He said the depreciation of the rupiah was not actually a bad thing. In Indonesia, current high demand for foreign currencies, caused by a surge in imports, was one of the major causes of the pressure on the currency.

“In countries with strong production, currency depreciation can offer an advantage to domestic producers,” he concluded. (ebf)

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