TEMPO.CO, Jakarta - Vice president Jusuf Kalla asked Bank Indonesia (BI) to make money market interventions to prevent the rupiah from experiencing a sudden, drastic correction. The government, Kalla said, will support the central bank`s policies to keep the rupiah from fluctuating.
Kalla’s statement is a response to the rupiah’s depreciation to 14,000 per US dollar. The central bank’s middle rate today sees the garuda being traded for 14,043/US$.
Kalla said Tuesday, that the rupiah is weakened by global situations, especially the US dollar’s appreciation against most currencies, and not because of domestic factors.
Read: Rupiah at 14,000/US Sri Mulyani Plan Strengthening Efforts
Nevertheless, the vice president said that a weak exchange rate will raise imported raw materials prices, although that could be mitigated by pushing domestic production.
Earlier today, Indef economist Bhima Yudhistira Adhinegara said that a rupiah depreciation will erode forex reserves. In April, Indonesia's forex reserves amounted to US$123 billion, down from March’s US$126 billion.
Bhima said that this cannot be allowed to continue.
“Bank Indonesia cannot rely on forex reserves as the only instrument used to stabilize rupiah’s exchange rate,” he told Tempo on Tuesday, May 8.
Vindry Florentin
