Rupiah Still Undervalued; BI Confident of Further Gains

TEMPO.CO, Jakarta - Bank Indonesia (BI) governor Perry Warjiyo said that as of November 18 the rupiah's exchange rate strengthened 3.94 percent compared to last month's average level. The rupiah is keeping last month's uptrend when it managed to climb 0.67 percent on average from September.

"The rupiah strengthened on the back of stabilization measures by Bank Indonesia," Perry said during the central bank's board of governors meeting on Thursday, November 19.

The rupiah gain, he added, was also supported by the increasing capital inflow as uncertainties in the global financial market subsided, and investors began to have positive perceptions again over Indonesia's improving economic prospects.  

"Looking ahead, Bank Indonesia believes that the rupiah has the potential to appreciate further as its fundamentals are still undervalued," he said.

This, he said, was supported by a low current account deficit, low and controlled inflation, the attractiveness of domestic financial assets, as well as Indonesia's declining risk premium and ample global liquidity.

Perry added that the central bank continues to strengthen its policies to stabilize the rupiah—in accordance with its fundamentals and market mechanisms—through effective monetary operations and maintaining market liquidity.

Bisnis.com