Strong Rupiah Tamping Down Inflation, Analysts Say
Inflation likely remained low in November, despite some seasonal demand leading up to the Idul Adha holiday last week, economists said on Monday.
In interviews with the Jakarta Globe, economists said a stronger rupiah helped contain inflation that might have resulted from exports of gold and palm oil, which have surged in price.
The Central Statistics Agency (BPS) is to announce November inflation data today.
Domestic economists predicted month-over-month inflation for November in a range of 0.07 percent to 0.22 percent, with year-over-year inflation of 2.51 percent to 2.7 percent, compared with 2.57 percent in October.
“Generally, inflationary pressures are probably still out of sight as far as incoming data is concerned,” said Helmi Arman, an economist with PT Bank Danamon. “Prices of some commodities such as gold and palm oil have increased lately, but the impact on inflation should be somewhat counterbalanced by the strengthening of the rupiah in recent months.”
According to Bloomberg, the rupiah has risen 15 percent this year. On Oct. 15 it hit 9,280, its strongest level since September 2008.
However, Helmi said the rupiah is unlikely to rise much further against the US dollar in the near future as foreign investors wait for clarification of Bank Indonesia’s recent statements that it was considering capital controls to cool foreign inflows. Bank Danamon has projected the rupiah at 9,600 to the greenback by year-end.
Eric Alexander Sugandi, an economist at Standard Chartered Bank, said inflationary pressures were likely to kick in next month as the Christmas and New Year holidays boosted demand and prices. However, he said the central bank was likely to keep its benchmark interest rate unchanged at 6.5 percent until the end of the year as inflation would remain manageable.