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RI's foreign exchange reserve sufficient to stabilize rupiah
Bank Indonesia (BI) said Indonesiaâs foreign exchange reserve, currently US$107
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ank Indonesia (BI) said Indonesia's foreign exchange reserve, currently US$107.55 billion, was big enough to stabilize the rupiah exchange rate, which had continued to weaken recently.
'Up until now, we think that a $107 billion foreign exchange reserve is sufficiently large to stabilize the rupiah,' said BI deputy governor Perry Warjoyo as quoted by Antara in Jakarta on Tuesday.
He said BI had conducted various tests to simulate foreign exchange reserves that might be needed if capital outflows occurred and the central bank found that the current position of Indonesia's foreign exchange reserves was still adequate.
However, the deputy governor said, BI was preparing an alternative solution in the form of a bilateral swap with a number of countries to anticipate declines in the country's foreign exchange reserves.
'We still have a second line of defense to make sure we can give confidence to the market if needed. We have more than $107 billion and we are confident that a foreign exchange reserve as large as that is sufficient,' said Perry.
Commenting on the US dollar strengthening along with the US Federal Reserve's plan to increase its fund rate, Perry said the markets' reactions were too strong, creating pressure on the rupiah.
'The rupiah's weakening has gone too far. It's overshot. But this is the condition that must be faced if we are an open economy,' said Perry
Based on the central bank's Jakarta interbank spot dollar rate on Tuesday, the rupiah weakened again to Rp 14,067 per dollar from Rp 13,998 the previous day. (ebf)
