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Bloomberg
Bank Indonesia expects a stronger rupiah as investors have priced in the US Federal Reserve’s plan to taper asset purchases.
“The rupiah is estimated to remain in a strengthening trend in line with strong economic fundamentals and positive investor perception that support inflows to domestic financial assets,†Hariyadi Ramelan, Bank Indonesia’s executive director for monetary management, told Bloomberg.
The central bank expects currency’s decline to be temporary, as market has priced in Fed’s comments, Ramelan added.
The rupiah is set for its largest weekly drop since July 2020, losing 1.5% to trade at 14,378 as of 12:06 am in Jakarta. Foreign investors have pulled almost $2 billion from local bonds so far this quarter.
“Bank Indonesia isn’t guarding the rupiah’s exchange-rate level but its stability,†Ramelan said.
The central bank remains in the market and stands ready with its triple intervention measures if there’s excessive volatility, he added.