Currency Stability: Indonesia's Rupiah Finds Firm Footing Amidst Economic Realities
Indonesian Finance Minister Sri Mulyani Indrawati, speaking on Tuesday, projected a stable trajectory with an upward tilt for the rupiah exchange rate, citing a gradual alleviation of pressure stemming from the robust U.S. dollar.
Addressing reporters in her capacity as the chair of Indonesia's Financial System Stability Committee, which encompasses key financial institutions like the finance ministry, central bank, Financial Services Authority, and deposit insurance corporation, Sri Mulyani underscored the importance of a resilient rupiah in the nation's economic landscape.
She emphasized that the rupiah's stability is bolstered by a perceptible easing in pressure exerted by the resolute U.S. dollar. Recent indications of a waning dollar appeal, driven by expectations of an imminent interest rate cut by the Federal Reserve, have contributed to this trend.
As of 04:34 GMT, the rupiah registered a modest gain of 0.16% against the dollar, reaching 15,780, marking its most robust performance in the past four days.
The rupiah had previously witnessed a slump, plunging to a 2-1/2-month low of 15,845, spurred by local media reports hinting at Sri Mulyani's potential resignation ahead of the February 14 presidential election. The speculation raised concerns regarding Indonesia's fiscal stability. In response, Sri Mulyani's ministry clarified that she remains steadfast in her role of managing state finances.
Bank Indonesia (BI) Governor Perry Warjiyo, speaking alongside Sri Mulyani, projected a strengthening of the rupiah in the latter half of 2024. He affirmed BI's commitment to intervening in the foreign exchange market to ensure rupiah stability, particularly amidst heightened pressure.
Warjiyo reiterated BI's strategy of purchasing bonds in the secondary market to neutralize foreign currency intervention effects. Thus far in 2024, BI has acquired bonds worth 8.8 trillion rupiah ($557.49 million).
Looking back, Sri Mulyani expressed optimism regarding Indonesia's economic growth in 2023, anticipating it to hover around 5%. The official data for 2023's economic performance is slated for release by Indonesia's statistics bureau on February 5.
For the closing term of President Joko Widodo's tenure in 2024, the government has set an ambitious economic growth target of 5.2%, signaling a proactive stance in navigating economic challenges amidst evolving global dynamics.
