REPUBLIKA.CO.ID, JAKARTA -- The Indonesian rupiah's strengthening against the US dollar in the past few days was caused not only by external factors but also due to domestic economic fundamentals, according to the central bank.

By Friday, the rupiah strengthened by up to 4.4 percent, higher than the Malaysian ringgit at 3.4 percent, Korean won at 1.2 percent, Taiwanese dollar at 1.2 percent, and Thailand bath at 0.4 percent, Deputy Senior Governor of Bank Indonesia (BI) Mirza Adityaswara stated here on Friday.

"It seems that the rupiah's appreciation, which reached up to 4.4 percent, higher than that of Korean won and Thailand bath, was caused not only by external factors but also by domestic fundamentals," he pointed out.

Admittedly, the release of some weaker than expected United States economic data in September, which will likely force the Fed to postpone an interest rate hike to early next year, has contributed to the strengthening of the rupiah, he explained.

Yet, the rupiah's appreciation was also contributed by domestic factors, he said.

"In my view, it seems that financial market investors had increasingly become confident in the government's serious efforts to conduct structural reforms. Earlier, foreign investors said the government had never been serious about conducting structural reforms. However, the issuance of economic policy packages has attracted foreign investors," he emphasized.

Even as the government has issued debureaucratization and deregulation packages, the BI will remain prudent in maintaining the monetary sector and will issue a policy to stabilize the rupiah, he remarked.

"The BI will remain prudent in issuing monetary policies and will increase foreign currency supplies to the spot and forward markets," he said.

Based on the JISDOR BI rate, the rupiah traded at Rp13,521 per US dollar on Friday against Rp13,809 per dollar the day before. Four days ago, the Indonesian currency still hovered at Rp14,604 per dollar.

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