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Rupiah returns to 12,900 amid deregulation, low-rate trend
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A Bank Indonesia staff member shows damaged money at a money replacement counter, set up as part of the bank’s “clean money policy”, aimed at providing the public with a good quality means of exchange. (the jakarta post/Wienda Parwitasari)
T
he rupiah closed 72 points stronger against the US dollar, leaving its 13,000 level to hit 12,980 at Friday’s close. The currency is strengthening as a result of deregulation policies, President Joko “Jokowi” Widodo said recently.
Bank Himpunan Saudara money market analyst Rully Nova said developed countries’ policy to maintain a zero benchmark interest rate, and even a negative interest rate in Japan, had given the rupiah the opportunity to move with an upward trend as global investors shifted their money to developing markets with a high yield.
"The positive yield in Indonesia makes rupiah denominated assets more attractive to investors. However, the swing in the fluctuation should not be too wide so local investors and businessmen can easily adjust to the change," he said as quoted by Antara news agency in Jakarta on Friday.
During the inauguration of a bonded logistics center on Thursday, Jokowi claimed that deregulation packages, along with positive monetary and market policies in Indonesia, had helped the rupiah to strengthen.
Jokowi underlined that the rupiah appreciation was not merely triggered by external factors. He asserted that both external and internal factors such as the good measures taken by the government had equally affected the strengthening of the rupiah.
“Both [triggered the rupiah appreciation]. If we did not undertake deregulation strategies, external factors will not help appreciation. In return, there were capital inflows. Automatically it [the rupiah] strengthened,” he said.
An analyst at Platon Niaga Berjangka, Lukman Leong, added that the benign inflation trend in Indonesia should also support the rupiah to strengthen further this year.
"Low inflation may lead to a further slash in the Bank Indonesia rate, which in turn will lower the cost of bank loans significantly, which will help domestic consumption and support the economy," he said. (ags)
