JAKARTA: Indonesia’s central bank will continue to intervene in the foreign exchange market to stabilise the rupiah, its governor said on Wednesday, adding that the currency would strengthen next year.
The rupiah recouped some of its losses on Wednesday to stand at 16,265 a dollar by 0603 GMT, after having weakened as much as 0.46% to a four-year low of 16,290.
Governor Perry Warjiyo’s comments came in a parliament meeting to discuss economic assumptions for next year that will be used to prepare the budget for 2025.
“Amid global turbulence, we continue our efforts to maintain the rupiah exchange rate by intervention in the foreign exchange market as well as when we raised the central bank rate to prevent foreign outflows,” Warjiyo said.
Warjiyo reiterated a projection for the rupiah to trade in a range of 15,700 to 16,100 a dollar this year, while expecting it to strengthen further next year to between 15,300 and 15,700 as the U.S. Federal Reserve’s rate cut intentions become clearer.
The central bank forecast the U.S Fed will start cutting its key policy rate by 25 basis points at year-end, followed by a total of 50 basis points in the first half of 2025, Warjiyo added.
In April, Bank Indonesia (BI) delivered a surprise hike in interest rates to support the rupiah, but kept rates steady last month as inflation was in check and the rupiah had stabilised.
Its board of governors next meets to discuss rate policy on June 19 and 20.
The central bank will keep up its close co-ordination with the government to control inflation, Warjiyo added.
Fiscal and monetary policies must be synchronised to respond to market volatility, Finance Minister Sri Mulyani told the meeeting.
“The central bank governor and I both see that we need to continue to calibrate and synchronise the fiscal and monetary policies because the trade-off policy challenges become very tight,” Sri Mulyani said.
The measures taken aimed to support economic growth and manage financial stability, she added.
The government has proposed an economic growth target of 5.1% to 5.5% for 2025. For 2024, the target was 5.2%. – Reuters