Rupiah Continues to Fluctuate Above IDR 16,000 Throughout the Week

The Rupiah continues to move above IDR 16,000 per US dollar. The public is asked to remain calm in facing these dynamics.

KOMPAS/PRIYOMBODO

Officers check US dollars being exchanged at PT Valuta Artha Mas, Jakarta, Tuesday (16/4/2024).

JAKARTA, KOMPAS — The rupiah exchange rate against the US dollar throughout this week has continued to fluctuate above the level of IDR 16,000. Bank Indonesia ensures that rupiah stability is maintained in order to strengthen the external resilience of the Indonesian economy.

Based on data from Jakarta Inter Spot Dollar (Jisdor), the rupiah closed at the level of Rp 16,280 per US dollar or weakened by 0.63 percent compared to the previous closing. Since the reopening of the rupiah spot market on Tuesday (16/4/2024), the rupiah instantly broke through its psychological level at Rp 16,000 per US dollar or weakened by 1.9 percent compared to the market closing before the Eid holiday.

This is happening alongside the strengthening of the US dollar index (DXY), which this week moved up 106 basis points (bps) or reached its highest level since November 9, 2023. The trend of DXY increase has been occurring since late March 2024. As a result, the exchange rate of several countries' currencies depreciated, including the rupiah.

Also read: Rupiah Reaches IDR 16,240, Two Monetary Policy Options Open

Governor of Bank Indonesia (BI) Perry Warjiyo said, Indonesia is one of the developing countries (emerging market) with a strong economy in facing the impact of global spillovers due to uncertainty over the reduction in US interest rates and increasing tensions in geopolitics in the Middle East . This is due to prudent and closely coordinated monetary and fiscal policies.

Through his official statement, Perry emphasized that exchange rate stabilization is an important part of strengthening the external resilience of the Indonesian economy. This is also supported by market-friendly management of foreign portfolio flows, promarket monetary operations, and inland integration of the money market.

"We continue to ensure the stability of the rupiah is maintained through foreign exchange intervention and other necessary measures," said Perry at the International Monetary Fund-World Bank Meeting in Washington DC on Thursday (18/4/2024).

Chief Executive of the Banking Supervision Services Authority Finance Dian Edian Rae explained that several factors influenced the strengthening of the US dollar, including the policy of high interest rates for a long time (high for longer< /i>).

This position continues as the US economy is still solid with inflation rates still far from the 2 percent target. This is reinforced by The Fed's statement that they are not rushing to lower interest rates and will continue to monitor the development of US economic data in the future.

We continue to ensure that rupiah stability is maintained with foreign exchange interventions and other necessary steps.

On the other hand, there has been an escalation of geopolitical tensions in the Middle East after the Iran-Israel conflict. This escalation raises concerns that the war will spread further and could burden the world economy, especially due to soaring major energy and mineral prices as well as logistics costs.

"The increase in geopolitical tension and global uncertainty has caused the US dollar, which is one of the safe haven assets, to continue to be sought after by market players and has encouraged its further strengthening," said Dian in her official statement, Friday (19/4/2024 ).

KOMPAS/MAWAR KUSUMA WULAN

Bank Indonesia Governor Perry Warjiyo spoke after attending a limited meeting led by President Jokowi and attended by Vice President Ma'ruf Amin on Tuesday (16/4/2024).

Resilient banking

In the midst of this situation, OJK assesses that the risks faced by the national banking industry recently can still be mitigated well. The results of the stress test (stress test) show that the current weakening of the rupiah exchange rate has a relatively insignificant direct effect on bank capital considering that the net foreign exchange position (PDN) of banks is still far below the threshold and the size of foreign currency assets ( foreign currency) owned is greater than the liabilities.

Regarding the capitalization ratio of the banking industry reflected by the Capital Adequacy Ratio (CAR), it is believed to still be able to absorb fluctuations in the exchange rate of the rupiah and the high benchmark interest rate that is still held back. Meanwhile, the proportion of third-party funds (DPK) in the form of foreign currency is currently only 15 percent of the total DPK of banks.

Also read: Reduce the Impact of Dollar, Business World Urged to Use Local Currency

"The calmness and rationality of the community, as well as coordination among related authorities, are key factors in facing the current dynamics of global economy," said Dian.

OJK also urged the banking industry to always monitor the potential transmission impacts of global and domestic economic developments on bank conditions and mitigate their impacts. On the other hand, members of the Financial System Stability Committee will continue to coordinate to determine the necessary policy measures appropriately and in a timely manner.

TANGKAPAN LAYAR

Executive Head of Banking Supervision at the Financial Services Authority (OJK), Dian Ediana Rae, explained the development of the banking sector during the OJK's Monthly Commissioner Meeting in March 2024, held online on Tuesday (2/4/2024).

The Chief Executive Officer of PT Bank Rakyat Indonesia (BRI), Sunarso, stated in his official statement on Thursday, April 18, 2024, that BRI will implement strict measures in future corporate action plans. BRI will also continue to maintain the proportion of credit affected by the volatility of the rupiah, interest rates, and oil prices.

Also read: Israel Allegedly Responding to Iran, JCI Almost Touches 7,000

This step is in line with the instructions of State-Owned Enterprises Minister, Erick Thohir, to BUMN banks. Erick also requested that all BUMN immediately review their operational costs for capital expenditures, maturing debts, corporate action plans, as well as stress tests to assess the current situation.

"Of course, as directed by the Minister of State-Owned Enterprises, we will conduct stress tests and also closely monitor the global economic and geopolitical impacts on the conditions in the country," said Sunarso.