Governor of Bank Indonesia, Perry Warjiyo, is optimistic that Indonesian Rupiah will rise again in 2020. (Image via: CNBC Indonesia)

Rupiah to Come Back Stronger in 2020: BI

Alfonsus Adi Putra
Market & Investment
Foreign Exchange & Interest Rate
Jun 18, 2019
2409
Previously, Indonesian Minister of Finance, Sri Mulyani Indrawati, stated that next year, Indonesian Rupiah (IDR) rate would weaken against US Dollar (USD) to be or to be more than Rp15,000. Nonetheless, the Governor of Bank Indonesia (BI), Perry Warjiyo, stated the different.

Optimistically, Mr. Warjiyo stated that next year BI predicted a rising in performance of our beloved Rupiah to be lower than Rp14,000, or ranging from Rp13,900 – Rp14,300. Currently, IDR is weakening against USD at Rp14,335 by the Monday listing.

Mr. Warjiyo’s statement was not without foundation. Furthermore, he stated that there were 4 reasons why IDR should be stronger by 2020.

First things first, he believed in the strengthening of Indonesia’s development, in terms of economy, inflation, and current account deficit. He added that the rapid economic development would diminish the negative sentiment of foreign investors against Indonesia.

Second things second, BI predicted that 2020 would be a good year. Trade war would cease, and policies of other central banks, especially Federal Reserve, would loosen up. Previously, Federal Reserve was predicted to raise the interest rate. However, what happened was the contrary. Since the interest rate was cut, this would result in the positive factor over capital inflow.

Third, BI, Indonesian government, and OJK will cooperate to keep the stability of Indonesia’s economic state. How? By maintaining the current account deficit and encouraging foreign capital inflow, in order to stabilize Indonesia’s economy.

The last factor would be variation of investment instruments. Mr. Warjiyo claimed that BI would develop and explore financial market, by interest rate swap.

In the Draft State Budget meeting, the macro assumption for IDR was ranged from Rp14,000 – Rp14,500. This was agreed by the government and 11th Commission of People’s Representative Council. The assumption was important in order to arrange state budget for 2020. During this meeting, Ms. Sri Mulyani predicted that it was possible for IDR to reach Rp15,000.

Source: https://www.cnnindonesia.com/ekonomi/20190617232133-78-404080/rupiah-berpeluang-di-bawah-rp14-ribu-per-dolar-as-tahun-depan

Economy , Foreign Exchange , Indonesia , IDR , US , USD , Ministry of Finance , Sri Mulyani Indrawati , Bank Indonesia , Perry Warjiyo , Federal Reserve , Joko Widodo , OJK