Rupiah Still Undervalued at 14,700 per Dollar, BI Governor Says



Laila Afifa

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  • TEMPO.CO, JakartaBank Indonesia (BI) Governor Perry Warjiyo said that the rupiah's current exchange rate, at around Rp14,700 per US dollar, is still undervalued. When announcing the minutes of the central bank's board of governors' meeting on Tuesday, Perry said the rupiah still has a chance to gain, supported by low current accounts deficit and inflation, as well as the domestic assets considerable attractiveness and lower risk premium.

    Perry said that the monetary authorities are able to keep the rupiah stable until the year-end.

    "Surely, we will strengthen policies to stabilize the rupiah exchange rate, in accordance with the fundamentals and the workings of the market mechanism," he said in Jakarta, October 13.

    Throughout September 2020, the rupiah weakened 2.13 percent over global and domestic financial markets' uncertainties. On Monday, October 12, the rupiah managed to gain 0.34 percent on average compared to the September level, supported by the return of capital inflows as global liquidity improve and investors regain their confidence in the prospects for the domestic economy.

    Today, the central bank decided to keep the Seven Days Reverse Repo Rate (BI7DRRR) unchanged at 4.00 percent, "taking into account the need to maintain the stability of the rupiah exchange rate amidst inflation which is expected to remain low," Perry said.

    Read: Market Concerns over US Economy; Rupiah Expected to Gain