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BI to intervene if tax amnesty pushes rupiah too high
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Bank Indonesia senior deputy governor Mirza Adityaswara answers a journalist's question after Friday prayers in Jakarta on Friday (thejakartapost.com/Anton Hermansyah)
B
ank Indonesia (BI) has restated its determination to maintain the rupiah at a stable level, preparing for a market intervention if the currency gets too strong as a result of the repatriation of tax amnesty funds.
BI senior deputy director Mirza Adityaswara expected a major funds inflow into the country following the implementation of the tax amnesty policy, as demand for the rupiah increases as foreign-denominated assets are repatriated and converted into rupiah.
"The rupiah will be stronger and will be followed by increased foreign reserves. Because the funds will go to the money markets first," Mirza told thejakartapost.com on Friday in Jakarta.
However, he emphasized that a rapid significant appreciation in the currency would be harmful for Indonesian exports. Therefore, a market intervention would be launched if the situation required it.
Mirza said the increased foreign reserves would also give BI more flexibility and power in conducting the market operation.
"Our manufacturing industry needs a supportive currency. But first, we need to assess how big the effect of the tax amnesty will be," he said. (ags)
