Bank Indonesia expects the rupiah to continue to strengthen and currency market volatility to subside as market price in expected US Federal Reserve’s interest rate hikes, a senior official said on Wednesday (14/03).
“The fundamental level of an exchange rate is not a fix level, but I can say that the current level is not [the rupiah’s] fundamental and it should be stronger than now,” said Doddy Zulverdi, who heads the monetary management department at Bank Indonesia (BI) and is also one of the candidates to become a member of BI’s board of governors.
Doddy reiterated BI’s commitment to intervene in the market to guard the rupiah against volatility. He said the recent weakness has had limited impact on exports, but has likely had a bigger effect on holding back imports.
The rupiah touched a two year low of 13,800 a dollar earlier this month. It was trading at 13,731 per dollar on 0400 GMT Wednesday.