Indonesia’s Dollar Supply Increases as Investors Return
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The value of the rupiah has stabilized in recent days as the domestic supply of dollars has increased due to inflows from returning investors and more exporters converting their earnings, Bank Indonesia Governor Perry Warjiyo said on Friday (21/09).
“The rupiah has stabilized and it tends to strengthen,” Perry said. “Many fund managers have begun to invest and allocate their portfolios to emerging markets. So what was going out has begun to return.”
The rupiah traded at 14,815 to the dollar at 1.05 p.m. in Jakarta on Friday, marginally stronger than Thursday’s closing.
Perry also said inflation is expected to stay benign this year despite the rupiah’s fall, saying the rate is seen near the lower end of Bank Indonesia’s 2.5 percent to 4.5 percent target range. The annual inflation rate stood at 3.20 percent in August.
Bank Indonesia has raised interest rates four times since mid-May to defend the rupiah, which fell to its weakest in 20 years amid wider emerging market selloffs. It will meet again next week to review monetary policy.
Questions & Answers
Q.What is the current value of the rupiah against the dollar?
What is the current value of the rupiah against the dollar?
On Friday, the rupiah was trading at 14,815 to the dollar at 1.05 p.m. In Jakarta. This represented a marginal strengthening compared to its closing value on Thursday.
Q.Why has the supply of dollars increased in Indonesia?
Why has the supply of dollars increased in Indonesia?
The increased dollar supply is due to two main factors: inflows from investors who are returning to the market and more exporters converting their earnings into rupiah. This indicates renewed confidence in emerging markets.
Q.What is the current inflation rate in Indonesia and what is the central bank's target?
What is the current inflation rate in Indonesia and what is the central bank's target?
The annual inflation rate stood at 3.20 percent in August. Bank Indonesia expects it to remain near the lower end of their target range, which is between 2.5 percent and 4.5 percent this year.
Q.What actions has Bank Indonesia taken recently regarding interest rates?
What actions has Bank Indonesia taken recently regarding interest rates?
Bank Indonesia has raised interest rates four times since mid-May. These increases were implemented to defend the rupiah, which had fallen to its lowest value in 20 years amidst wider emerging market sell-offs.
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