Bank Indonesia defends rupiah

Bank Indonesia is defending the rupiah with heavier market intervention after the currency fell to a record low near 17,315 per U.S. dollar last week. (en.tempo.co) (tradingeconomics.com) The central bank held its benchmark BI-Rate at 4.75% on April 22 and said it would strengthen rupiah stabilization through offshore non-deliverable forwards, domestic spot trades, domestic non-deliverable forwards and measured secondary-market purchases of government bonds. (bi.go.id) Senior Deputy Governor Destry Damayanti said on April 23 that the rupiah had briefly breached 17,300 and was down 3.54% year to date, with pressure coming from broader global uncertainty hitting regional currencies. (en.tempo.co) Governor Perry Warjiyo said the rupiah is now trading below its fundamental value, with Tempo reporting the currency remained above 17,200 on Monday, April 27, after last week’s record slide. (en.tempo.co) Tempo cited Permata Bank chief economist Josua Pardede estimating the rupiah’s fair value at about 16,407 in March, implying the market rate around 17,295 to 17,300 was roughly 5.4% weaker than fundamentals. (en.tempo.co) Bank Indonesia says the pressure is tied to worsening global conditions linked to the Middle East war, while outside economists cited high oil prices, import demand, dividend repatriation and concern about Indonesia’s energy-subsidy burden. (bi.go.id) (en.tempo.co) The bank’s buffer is still large. Bank Indonesia said foreign-exchange reserves stood at $148.3 billion at the end of March, equal to 5.8 months of imports and government external-debt servicing. (bi.go.id) Trading Economics showed the rupiah at about 17,219 on April 27, a modest rebound from the record low but still weaker than levels seen before the April selloff. (tradingeconomics.com) For now, Bank Indonesia is betting that intervention, steadier volatility and still-high reserves can hold the line without a rate increase. (bi.go.id 1) (bi.go.id 2)