BI asked to move faster in intervention to prop up Rupiah

Jakarta (ANTARA News) – A lawmaker urges Bank Indonesia (BI) to move faster in forestalling impact of any external factor weakening rupiah to prevent the national currency from losing more value.

“The Central Bank has to be faster and more precise in timing its decision to launch a policy,” Siti Masrifah, a member of the Parliamentary Budget body, said here on Monday.

The Central Bank could not be in the market any time, therefore, it has to move faster than the speed of the loss in the rupiah value, Siti said.

The rupiah has lost much of its value hitting the weakest point in a number of years mainly as a result of the U.S. Central Bank raising its fund rate.

Bank Indonesia already raised its benchmark interest rate in a bid to keep the currency from sinking deeper that could disrupt the countrys economic stability.

The latest move by Bank Indonesia was raising its “7-Day Reverse Repo Rate” to 5.25 percent from 4.75 percent.

Bank Indonesia Governor Perry Warjiyo said the decision was taken to cushion the impact of growing external pressure on the countrys economy especially on rupiah.

“This is a preemptive monetary policy to keep one step ahead and front loading,” Perry had said.

Coordinating Minister for Economy Darmin Nasution said he welcomed Bank Indonesias decision, saying,” There is no other way . Otherwise we would be left behind.”

Darmin said he was confident the rise in the “7-Day Reverse Repo Rate” is a response to global developments including the rise in The Fed fund rate, escalating trade war between China and the United States and geopolitical condition.

Darmin said the government has done what it could do to cope with the impact of the external turbulence by seeking to cut the current account deficit, which has been the domestic factor causing rupiah weakening.

Th government has also strengthened the business competitiveness and sought to boost the investment sector and exports, he said.

However, he hoped that the rise in the benchmark interest rate would not be immediately followed by increase in bank lending interest that the condition would not hurt the real sector, which has been the main backbone of the countrys economy.

“This would not be easy , but actually the Financial Service Authority (OJK) could persuade banks not to be in a hurry to raise their lending rate, although it could not be forced upon banks,” the former Governor of the central bank said.

On Sunday, Minister for National Development Planning/head of the National Development Planning Board (Bappenas) Bambang Brodjonegoro said Asian Games to be held in Jakarta and Palembang next month could shore up rupiah.

“Asian Games is held in line with our strategy to help strengthen rupiah,” Bambang said at a discussion forum here.

The largest sport event in Asia could draw more foreign tourists to Indonesia, he said.

Around 200,000 foreign tourists are expected to visit the country during the even from 18 August to 2 September 2018.

The foreign visitors would spend foreign exchange increasing the countrys foreign exchange income that would give greater stability for rupiah exchange rate against the U.S. dollar, he said.

“If we failed to earn foreign exchange from exports, we hope to make it in the tourism sector,” he said.

Source: ANTARA News