Rupiah Down 0.1% as BI Decides to Keep Interest Rates

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Mahinda Arkyasa

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  • TEMPO.CO, Jakarta - The Rupiah's interbank rate in Jakarta fell on Tuesday afternoon, April 14, 2020. The currency rate was corrected slightly after Bank Indonesia (BI) decided it would keep interest rates at current levels.

    Rupiah fell 15 bps or 0.1 percent to trade for IDR 15,645 per US Dollar.  

    TRFX Garuda Berjangka director Ibrahim Assuaibi said that BI decided to keep the interest rate benchmark, the 7DRR, at 4.5 percent, on the basis that Indonesia's economic fundamentals are still quite stable. Meanwhile, the central bank today conducted another intervention at the forex and bond markets. 

    The intervention, Ibrahim said, managed to keep the rupiah at a stable pace albeit despite the small margin of correction.

    Another sentiment came from Finance Minister Sri Mulyani Indrawati's statement that Indonesia's worst-case scenario for Q2's economy if growth rate fell to a range of -0.3% to 2.6% because of the Covid-19 pandemic.  

    The economy will still face growth pressures in Q3, but there are chances of improvements in Q4.

    Annually, Indonesia's growth is estimated at 2.3 percent. However, if things take the worst possible turn, the growth rate could be as low as -0.4 percent. 

    To rescue the economy, the government will prioritize this year's state budget for three elements: the health sector, social safety net, and support for the business world. This strategy will work if the transmission rate of Covid-19 gradually declines.

    ANTARA