The Jakarta Post
Bank Indonesia Governor Perry Warjiyo has said the rupiah, which was quoted at Rp 14,954 per US dollar on Tuesday, is away from its fundamental value.
“It is true that the rupiah exchange rate depends on market sentiments. Based on its fundamental calculation, the currency is not weakening,” Perry said at the House of Representatives in Jakarta as quoted by kontan.co.id.
He said rupiah depreciation was affected by negative sentiments, from both domestic and external factors.
Domestically, the rupiah weakening was caused by the purchase of the rupiah by corporations and importers to pay debts and finance imports, while, externally, the rupiah was affected by speculation of an increase in the Fed Fund Rate and the currency crises in Argentina and Turkey, Perry said.
Therefore, he called on corporations in the country to not stockpile dollars because it would negatively affect the market.
“We called on the importers and corporations to not stockpile dollars. We have prepared the swap. On Friday, the swap target was at US$400 million, but the realization was at $850 million. We are also committed to stabilizing the rupiah and intensifying our intervention,” Perry said.
The central bank had spent Rp 7.1 trillion since last Friday to purchase government debt papers sold by foreigners, Perry said, adding that BI’s move to increase the seven-day reserve repo rate to 5.5 percent was also to help make the debt papers more attractive.
Since January, the rupiah has depreciated by more than 7 percent. (bbn)