We’re Ready to Shield Indonesia’s Economy: Bank Indonesia
The value of the rupiah strengthened on Monday after the central bank said at the weekend that it was prepared to help the nation cope with global financial turmoil.
Bank Indonesia said in a statement that the country was ready to confront a possible financial crisis triggered by the debt crisis in the euro zone. It said it would boost intervention in the foreign exchange market to reduce rupiah volatility.
“We will increase the supply of foreign exchange in the market accordingly as an effort to stabilize the rupiah,” central bank governor Darmin Nasution said in a statement.
In recent weeks, many overseas investors have scaled back their exposure to Indonesia, cutting demand for the rupiah as investors sought US dollars instead.
The rupiah, which has weakened 4 percent so far this year, traded at 9,438 on Monday, marginally stronger than its 9,468 close on Friday.
Debt and foreign exchange dealers in Jakarta said on Monday that the central bank was seen in the market, selling a small amount of dollars on Monday. “The central bank will continue to guard the market,” a dealer with a Jakarta bank who declined to be identified said on Monday.
BI started offering dollar term deposits last week to stabilize the rupiah amid a local shortage of greenbacks. BI has said it will continue to offer similar facilities.
President Susilo Bambang Yudhoyono said on Sunday before the Group of 20 summit in Mexico that the absence of “an agreement on rigorous methods” to manage the debt crisis in Europe will have “unsettling consequences to all of us.”
The yield on the government’s 7 percent bonds due May 2022 fell 0.03 percentage points to 6.36 percent, the lowest level since May 14, according to closing prices from the Inter Dealer Market Association