Indonesia: BI optimizes forex management to maintain rupiah stability
Jakarta (ANTARA) – Bank Indonesia (BI) has continued to optimize foreign exchange (forex) management to maintain the stability of the rupiah exchange rate and support national economic growth.
“We believe that the exchange rate will strengthen and we will continue to maintain it, and, of course, we will continue to optimize the management of foreign exchange flows for our exchange rate stability, for our external stability, for our economic stability,” BI Governor Perry Warjiyo said.
He made the remarks at an event held to launch the 2022 Bank Indonesia Transparency and Accountability Report (LTABI) in Jakarta on Monday.
BI has made several breakthroughs, including formulating regulations to mobilize foreign exchange earnings and Operation Twist, or the sale or purchase of government securities (SBN) in the secondary market to maintain the stability of the rupiah exchange rate.
“Bank Indonesia has issued a Bank Indonesia regulation to mobilize foreign exchange earnings and manage foreign exchange flows,” he said.
The regulation is Bank Indonesia Regulation Number 24/18/PBI/2022 concerning the second amendment to Bank Indonesia Regulation Number 21/14/PBI/2019 concerning export proceeds and import payments, which took effect on November 30, 2022.
The regulation was issued to support the implementation of BI’s monetary policy for strengthening the stability of the rupiah exchange rate through bolstering export proceeds (DHE) regulations to ensure that DHE, especially from Natural Resource (SDA) commodities, can be placed in the domestic financial market on an ongoing basis.
“In normal times, of course, we will leave the market mechanism alone. But with turmoil, Bank Indonesia will not hesitate to intervene to stabilize the rupiah exchange rate; that is a breakthrough,” he said.
BI will also continue selling/buying SBN in the secondary market to strengthen the transmission of increases in the BI benchmark interest rate (BI7DRR) and thereby, increase the attractiveness of SBN yields for foreign portfolio investors and strengthen the stability of the rupiah exchange rate.
The central bank has strengthened the stabilization of the rupiah exchange rate as part of efforts to control inflation, especially imported goods inflation (imported inflation), through intervention in the foreign exchange market with spot transactions, Domestic Non-Deliverable Forwards (DNDF), and buying/selling of government securities (SBN) in the secondary market.
Going forward, Bank Indonesia has projected that the rupiah will continue to strengthen in line with improving economic prospects and therefore, inflation will reduce.
The interbank rupiah exchange rate in Jakarta on Monday morning (January 30, 2023) strengthened 11 points, or 0.07 percent, to Rp14,975 per US dollar from Rp14,986 at the close of trade on Friday.