Bank Indonesia Predicts CAD to Decrease to 2.5 Percent of GDP
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12 August 2019 00:11 WIB
TEMPO.CO, Jakarta - Senior Deputy Governor of Bank Indonesia (BI) Destry Damayanti, expressed her optimism that the Current Account Deficit (CAD) will decrease by the end of 2019. Destry predicted that CAD can be in a range between 2.5 to 3 percent of the Gross Domestic Product (GDP).
"We will continue to try, BI can't do this alone because it is highly related to the real sector," Destry said on Sunday, August 11, 2019.
She confirmed that what has become BI's tasks and functions continue to run well, such as maintaining the stability of the Rupiah exchange rate and increasing liquidity. Destry asserted that BI had issued several financial instruments to increase liquidity in the foreign exchange.
"Including hedging instruments. It has been issued by BI and so far the market responded positively. For example DNDF [Domestic Non Delivery Forward], now many market players entered DNDF instead of the DNDF in foreign countries or Singapore," Destry stated.
Previously, BI recorded an expansion of the CAD in the second quarter of 2019. The condition was affected by seasonal occurrences of dividend repatriation, payment for foreign loan interest, and less favorable global economic conditions.
BI recorded the CAD to be increasing from USD 7.0 billion or equal to 2.6 percent of the GDP in the first quarter of 2019 to become USD 8.4 billion or 3 percent of the GDP. In addition to repatriation and payment of loan interests, expansion of the CAD also occurred due to decreasing commodity prices.
HENDARTYO HANGGI | FAJAR PEBRIANTO