The Jakarta Post
Bank Indonesia monetary management department head Nanang Hendarsah said on Friday that the rupiah exchange rate against the US dollar had begun to rebound as the external pressure on the currency had started to subside.
Nanang mentioned two factors for lessening pressure on the rupiah, namely moves by some central banks of developed countries, such as Switzerland, Australia and Sweden. Those banks have decided recently to maintain a relaxed monetary policy stance.
“Even if the federal funds rate will be increased at the FOMC (Federal Open Market Committee) meeting, next week, analysts doubt that would strengthen the US dollar exchange rate,” Nanang said as quoted by kontan.co.id., adding that the US dollar index, which in May was at 95.6 had since declined to 93.8.
Nanang said the second factor was that investors’ trust in emerging markets was on a recovery trend. “As an example, this was marked by the yield of Indonesian government bonds, which touched 8.7 percent,” he said.
On Thursday, the foreign capital inflow to government bonds reached Rp 2.8 trillion ($189 million), Nanang said, adding that that was an indication that foreign investors’ trust to put their funds in Indonesia had recovered. (bbn)