TEMPO.CO, Jakarta - Bank Indonesia (BI) is intervening in the market in a bid to strengthen the rupiah, which has been on a losing streak for the past couple of days. Previously, the rupiah exchange rate had slipped past Rp12,000 per United States (US) dollar.
"BI will intervene further if the rupiah continues to weaken. The interventions are done in order to avoid further volatilities in the market," said Deputy Senior Governor of BI Mirza Adityaswara at the BI complex on Friday, September 19, 2014.
According to Mirza, Indonesia's market has not fully recovered yet. "In Thailand and Malaysia, the total capitalization of transactions in a day hovers between US$11-15 billion per day. In Indonesia, the value is around US$5 billion on a good day. On an average day, the value is more likely to be around US$3-4 billion," he said.
Mirza added Indonesia's market was still very fragile, which made it susceptible to fluctuations. "BI has to intervene because the fluctuations are very wide," he said.
Mirza said the current economic condition needs to be improved by the next administration, for example, by reducing Indonesia's dependency on imports. "Indonesia needs to curtail oil imports to ease the strain on the State Budget (APBN)," said Mirza.
An economist from Samuel Sekuritas Indonesia, Rangga Cipta, has said that the Fed's rather hawkish position will positively impact demands for the US dollar in the global market—including within Indonesia, which consequently makes for a weaker rupiah.
"Although nothing new came out of the Fed's meeting apart from the reduction of economic stimulus, investor saw that the meeting ended with a more aggressive outlook on the future of the economy," said Rangga.
As per 12.15 p.m. Jakarta time, the rupiah slipped by 67.9 points or 0.57 percent to trade at Rp12,037.5 per US dollar.