The Jakarta Post
Indonesia has welcomed the inflow of foreign capital to its sovereign bond and stock markets recently, positively influencing the rupiah exchange rate against the US dollar.
The central bank saw inflows of Rp 14.4 trillion (US$984.14 million) into sovereign bonds assets month-to-date in November, said Bank Indonesia (BI) Governor Perry Warjiyo in Jakarta on Friday.
The figure brought year-to-date inflows into sovereign bonds at Rp 42.6 trillion. Indonesia also welcomed Rp 5.5 trillion over the same period into its stock market.
The recent inflows have helped the rupiah strengthen to below Rp 15,000 against the greenback, being traded at Rp 14,632 against the dollar on Friday according to Jakarta Interbank Spot Dollar Rate (JISDOR) data.
Perry said a number of factors, which include easing tensions between United States and China, as well as the recent establishment of the Domestic Non-Deliverable Forward (DNDF) market starting this month, had contributed to the appreciation of the rupiah.
“From our monitoring, the DNDF’s [market] is growing well and it contributed to the deepening of the domestic foreign exchange market,” said Perry.
Meanwhile, DNDF transaction volume was recorded at $115 million since its establishment on Nov. 1.
Perry emphasized that the current rupiah’s value was a reflection of the market mechanism, hinting that the central bank was not heavily intervening the market through its dual intervention policy in the secondary bond and monetary markets. (bbn)