REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI), Indonesia's central bank, has rejected some reports of the current depreciation of the rupiah being caused by the unchanged BI rate, or officially called the "7-Day Reverse Repo Rate" in July. BI's Deputy Governor Erwin Rijanto denied claims that the rupiah had weakened on Friday owing to a negative response from the market after the central bank decided to keep the BI rate at 5.25 percent during a meeting of the board of governors on Thursday.

The BI had raised the rate up to 100 basis points in the last two months.

"If we look at it from a broader perspective, it is not only the rupiah that has depreciated today but also other currencies," Rijanto pointed out.

Rijanto noted that an improvement in the US economic data had strengthened the US dollar and widely impacted the depreciation of currencies of developing economies, including the rupiah.

Also read: BI continues to maintain stability in rupiah exchange rate

According to the Jakarta Interbank Spot Dollar Rate on Friday, the rupiah had opened at Rp14,520 per US dollar, or weakened 102 points, from Rp14,418 per US dollar on Thursday.

Echoing Rijanto viewpoint, senior analyst of CSA Research Institute Reza Priyambada remarked that the rupiah will continue to weaken, following an appreciation in the US dollar, supported by the market's positive response to The Federal Reserve's Governor Jerome Powell's statement on the US economic growth.

"(This occurred) despite his lack of detail on The Fed's monetary policy," Priyambada noted.

In his remarks, Powell stated that the US economy will remain stable and implied that The Fed had a plan to hike its rate on two other occasions in the second semester of 2018. The Fed had raised its rate twice during the January-June period.

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