Already ‘Overshot’, Governor of BI Promises to Strive for Stabilization of Rupiah

Governor of BI Promises to Strive for Stabilization of Rupiah

The rupiah exchange rate based on the exchange rate of Bank Indonesia (BI) on Wednesday (12/8) was recorded at Rp 13758.00, assessed Governor of Bank Indonesia Agus Martowardojo already weakened overshoot, so be well below of the fundamental value (undervalued).

In response to these developments, according to Agus Marto, Bank Indonesia has been and will continue to be in the market to make efforts to stabilize the exchange rate.

“Bank Indonesia will optimize the policy mix and continue to coordinate with the Government and other authorities,” Agus said in a press release that sends Wednesday (12/8) afternoon.

Governor of BI assess, developments of rupiah in recent time is mainly caused by the global situation. He said the market is still reacting to the decision of the Chinese government who depreciation of the Yuan currency.

According to Agus, globally, the depreciation of the Yuan impact on countries trading partner of China whose exports rely on natural resources, including Indonesia.

BI governor also said that the development of the latest data, in the US, such as the ISM non-manufacturing index, employment data, showing signs of improving, giving rise to expectations of market participants that US policy interest rate hikes (Fed Funds Rate) will be carried out be faster.

BI records showed, in general, almost all global currencies depreciate. As an illustration, the Malaysian Ringgit currency weakened by 13.3% (ytd), Korean Won weakened by 7.9% (ytd), the Thai baht fell by 7.4% (ytd), Japanese yen weakened 4.8% (ytd ), the Euro weakened by 8.9% (ytd), brasilian Real fell 29.4% (ytd), and the Australian dollar fell by 10.6% (ytd). While Rupiah, from January to the 1st week of August 2015 fell by 9.8% (ytd).