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View all search resultsRupiah back near 18,000 on strong dollar, high oil price
At a hearing with the House of Representatives on Monday, BI Governor Destry Damayanti said the central bank had reduced its spot market foreign exchange interventions to 30 percent of total interventions because they were too costly.
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An employee shows rupiah and United States dollar bank notes at a Bank Mandiri Syariah branch in Jakarta, in this undated file photo (Antara/Nova Wahyudi)
T
he rupiah weakened to 18,000 on Monday against a United States dollar that was hovering near a two-month high against other currencies as the standoff between the US and Iran pushed up oil prices and bond yields.
The Indonesian currency once again breached the psychological level of 18,000 to the dollar last week, after Bank Indonesia (BI) kept its benchmark interest rate unchanged at 5.75 percent despite a recent rate hike by the US Federal Reserve.
Newly appointed BI Governor Destry Damayanti said the central bank would rely more heavily on hedging to shield the rupiah from external pressure.
At a hearing with the House of Representatives on Monday, Destry added that BI had reduced its spot market foreign exchange interventions to 30 percent of total interventions because they were too costly, as reported by Reuters.
Interventions through the nondeliverable forward (NDF) market, she said, had proved more effective while reducing the need to draw on foreign exchange reserves.
Destry also said investment in the real sector needed to increase to help stabilize the rupiah.
The rupiah dropped well below the 18,000 mark to mark a historic low in early June but had strengthened to around 17,500 in early September, before weakening again as tensions in the Middle East intensified.
