REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia has indicated it would protect rupiah from losing its fundamental value amid external pressures on the national currency.
"We are always in the market and keeping its fluctuations under control and seek to keep the people's confidence in the currency," the central bank Governor Agus Martowardojo said here on Monday night (2/3).
Agus said external pressure in the form of US dollar strengthening that follows improvement of that country's economic condition , has weighed on the currencies of developing countries including Indonesia.
He said rupiah still fared better than many other currencies of developing economies.
"We still fare better than those among developing economies on a par with us like Brazil, Turkey and South Africa," he said.
He predicted rupiah would move around the range of three to five points plus and minus the target level of 12,500 per dollar set in the state budget for this year.
"Certainly this is in line with the global economic development, normalization of the Fed policy and the demand for foreign exchanges every end of year," he said, adding it is still within reasonable level if rupiah weakened close to the level of 13,000 per US dollar.
When asked about the possibility of Bank Indonesia cutting its benchmark interest rate (BI rate) to follow the improvement shown in the country's inflation, he said it would depend on the latest economic data yet to be released.
"It all depends on the data. We could not talk about that now. We have yet to see inflation control by the government and the country's current account balance," he said.
On Monday afternoon in interbank transactions, rupiah traded at the level of 12,943 per dollar weakening from earlier level of 12,930 per dollar.
The biggest pressure on rupiah is the plan of the US central bank (The Fed) to raise its Fund Rate in the middle of this year and Chinese slashing its interest rate, the second in three months.
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