Agus Martowardojo (Kompas/Priyombodo)

Bank Indonesia (BI) governor Agus Martowardojo has said that the central bank projects that the rupiah exchange rate will sit between Rp 13,700 and Rp 13,900 per US dollar in 2016. This was based on predictions that the rupiah would strengthen in the third and fourth quarter of this year, after hovering around Rp 14,000 in the first quarter, he added.

'€œThe rupiah is currently '€˜undervalued'€™ and '€˜overshot'€™ due to limited capital inflows and reversals in the capital market. Many exporters and foreign currency buyers have been somewhat reluctant to sell their dollars, causing a negative balance of payments in the second quarter. However, the situation will be more optimistic in the third and fourth quarter,'€ said Agus as quoted by Antara news agency on Tuesday. He was speaking on the sidelines of a meeting between the Finance Ministry and the House of Representatives'€™ Commission XI overseeing finance and banking in Jakarta on Monday evening.

The meeting did not make any decision on macro assumptions for the 2016 state budget plan (RAPBN) as Commission XI head Fadel Muhammad suspended the meeting until Tuesday evening. The Budget Body will later discuss RAPBN 2016 macro assumptions that result from the evening meeting.

During Monday'€™s meeting, the Finance Ministry proposed a rupiah exchange rate assumption of Rp 13,400 per dollar in 2016.

'€œWe want to see a realistic calculation because the rupiah exchange rate will be influential for our oil and gas revenues and loan interest payments. A growth assumption is not influential for our budget posture but an exchange rate will certainly affect the budget posture,'€ Finance Minister Bambang Brodjonegoro said. (ebf)(++++)

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