REPUBLIKA.CO.ID, JAKARTA -- Governor of Bank Indonesia Agus Martowardojo said rupiah being undervalue could provide a good momentum to boost the business sector and investment.

"Rupiah is slightly undervalued against the currencies of our main partners. This could mean we have competitive business climate, but infrastructure has to be improved to boost investment," Agus said.

He said based on Real Effective Exchange Rate (REER) the rupiah value is slightly "undervalued" at around 100 per US dollar, but "this is not something to be worried about if the government continues structural reform."

He said in order to cope with the rupiah weakening the government needs to carry out fundamental improvement and continue structural reform, that rupiah could continue to give positive impact on the country's economic performance.

"Interest in exports has to be boosted despite a decline in commodity prices. If we could continue with structural reform in the central and regional administrations, BI would certainly be able to help in analyzing the financial market," he said.

Senior Deputy Governor of BI Mirza Adityaswara said rupiah has been undervalued since normalization of the US monetary police was issued in 2013.

However, BI would continue to monitor the rupiah movements, Mirza said.

He said the global trend now is dollar appreciation over currencies of developing economies including Indonesia.

The external pressure is one of the factors causing rupiah to weaken since last year, he said.

"Fundamental in current account deficit is gaining strength, but there is pressure with the dollar rice all over the world that foreign investors could not yet recognize improvement in the country current account balance," he said.

Meanwhile rupiah lost value in inter-bank transactions trading at the level of 13,349 per US dollar in the closing session on Wednesday weakening from earlier level of 13,335 per dollar.

"The rupiah weakens against the US dollar, amid minimum transactions and positive sentiment after Ied-ul-fitr," finance observer from Bank Himpunan Saudara Rully Nova said.

Rully said the rupiah fall in value was a result financial market players tending to release their rupiah assets to follow the low government spending in the first half of the year.

"Low capital spending by the government resulted in a decline in domestic consumption and in turn causing an economic slowdown," he said.

He said he hopes capital spending would increase in the second half of the year that the purchasing power of the people would be jacked up and economic growth would be revived.

Externally uncertainty over the decision of the US central bank to raise its fund rate is still a factor curbing rupiah rise, he said.

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