Indonesia’s central bank pledged “smart interventions” in the foreign-exchange markets as the rupiah fell to a record low.
“Bank Indonesia is committed to remain present in the markets via spot transactions, offshore and domestic non-deliverable forwards, as well as by optimizing all monetary policy instruments to reduce pressures on the rupiah,” Senior Deputy Governor Destry Damayanti said in a mobile-phone message late Tuesday.
High oil prices as well as rising domestic dollar demand to pay for foreign debt, dividend repatriation and the hajj, the Islamic pilgrimage to Saudi Arabia, are weighing on the currency, she said.
“BI estimates these seasonal factors to subside and allow the rupiah to return to its fundamental levels,” Damayanti said, without citing a specific level. Foreign capital inflows into the central banks’ rupiah securities and government bonds are also improving, she said.
A number of Asian central banks, including Indonesia, the Philippines and India, are stepping up the defense of their currencies as oil prices surge due to the Iran war. In Indonesia, concerns over the nation’s fiscal health and the risk of an MSCI Inc. downgrade for local stocks are adding to pressure on the rupiah.
The rupiah fell to a record low of 17,525 per dollar on Tuesday. The currency slid almost 5% this year, among the worst performers in emerging markets.
Bloomberg
