REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) believes the rupiah can still likely strengthen soon. The manageable domestic economic fundamentals and pressure in the past two days largely due to the dynamics of the US economy paid contribution to the condition.
The manageable domestic economic fundamentals include the inflation rate that is close to the central bank's lower target range of 2.5-4.5 percent, manageable state budget deficit, and movement of the current account deficit within the healthy range of less than three percent of the national gross domestic product (GDP), BI Deputy Governor Dody Budi Waluyo stated on Tuesday.
He pointed out that the first-quarter economic growth of 5.06 percent was also in line with BI's economic growth target of 5.1-5.5 percent for this year. However, while referring to BI's earlier statement, the growth fell short of the expectation of the central bank that had projected the first-quarter growth at 5.1 percent year-on-year.
"BI's assessment of the GDP remains positive, and (the economy) is projected to grow by 5.1-5.5 percent at the end of 2018," he stated.
For the first time since December 2015, the rupiah exceeded the psychological level of Rp14 thousand per dollar on Monday. The rupiah traded at Rp14,003 per dollar in the spot market.
The rupiah was expected to continue to weaken against the dollar on Tuesday. The Jakarta Interbank Spot Dollar Rate announced by BI on Tuesday showed that the rupiah weakened to Rp14,036 per dollar.
Also read: Rupiah fall only temporary: Central Bank
The rupiah also fell 35 points to Rp14,028 per dollar in the interbank spot market on Tuesday morning.
Economist Bhima Yudhistira of the Institute for Development of Economics and Finance noted that the economic fundamentals should always be strengthened to maintain investor confidence in the domestic market.
The government should stabilize the prices of fuel oil, electricity, and food commodities, particularly during the fasting month of Ramadhan, to bring the inflation rate under control, he added.
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