BI 'Cautious' over the State of Global Economy  

TEMPO.CO, Jakarta - Bank Indonesia (BI) Governor Agus Martowardojo expressed his concern over the uncertain state of the global economy, which is reflected through the volatility of global crude oil prices - among many other indicators. “When Saudi Arabia attacked Yemen yesterday, prices immediately went up,” said Agus at his office at the BI Complex on Friday.

Martowardojo said that these sort of conditions are constantly being monitored by BI.

Meanwhile, The Federal Open Market Committee (FOMC) Board Meeting, which finally decided to keep the Federal Fund rate at its current level, which immediately causes the Rupiah’s exchange rate against the greenback to appreciate. “As we can see, the Rupiah is not as weak as it was last week,” said Martowardojo.

That said, BI will remain vigilant because not all pressures on the Rupiah has subsided - especially since the period between March and June is when the government’s dues to its foreign creditor needs to be paid, which consequently will affect the availability  of the US Dollar in the domestic market and hence, could cause the Rupiah to depreciate. “Hopefully it would not fluctuate too much, especially since our economic fundamentals are quite good and our inflation control measures has been spot on for the past few months,” said Martowardojo.

Agus said that the Rupiah’s depreciation in the past couple of months will undoubtedly have an impact on March’s inflation figures, but he is sure that as the Rupiah is returning onto the right track, the impact could be minimized.

BI has predicted that March’s inflation rate will hover around the 0.27 to 0.3 percent mark. “It is indeed higher than our March average figures in the past seven years,” said Martowardojo, who added that such increase is relatively normal, considering the prices of several basic goods - which includes rice, onions, shallots, and fuels - have increased, while others, such as meat and poultry products, have continued to decrease. “We are optimistic that we could reach our 2015 inflation target,” he said.

An economist from the Institute for the Development of Economics and Finance, Aviliani, concurs with Martowardojo, and said that the global economic climate is still not entirely secure. “Investors are still waiting for the Fed with regards to their plan with their Fund rate,” she said.

According to Aviliani, as long as the Fed delays their decision, investors would remain to wait-and-see to gauge the conditions before they consolidate their investment stances, and that any decision made for the time being is short-term in nature. As a result, the Rupiah would continue to hover between Rp12,700 to Rp13,300 per US Dollar. “It will remain so until at least the end of the year,” she said.

ODELIA SINAGA | URSULA FLORENE SONIA