If the Fed Rate increases, the currencies of emerging markets, including Indonesia, will become less attractive.Jakarta (ANTARA News) - Bank Indonesia (the central bank/BI) has suggested that the government and the House of Representatives (DPR) stay alert for the possibility of an increase in benchmark interest rate by of the US Federal Reserve next year.
"(In responding to) the situation in 2018, we better exercise caution as the trend of the Fed Rate hike will continue. This year, it may be raised twice, but next year, it will certainly be raised. We must keep monitoring whether it will be raised thrice or more," BI Senior Deputy Governor Mirza Adityaswara stated at a hearing with the government and the House Commission XI at the parliament building here on Monday.
If the Fed Rate increases, the currencies of emerging markets, including Indonesia, will become less attractive, he noted.
"For its part, we put the exchange rate projection for 2018 at a more conservative range," he added.
BI has projected the rupiahs exchange rate against the dollar for 2018 to be between Rp13.5 thousand to Rp13.7 thousand. Meanwhile, the rupiahs exchange rate assumed in the draft 2018 state budget is Rp13.5 thousand per dollar.
After all, he remarked that the rupiahs exchange rate against the dollar may reach Rp13.4 thousand next year, which is the maximum limit to maintain the competitiveness of Indonesias exports.(*)
Editor: Heru Purwanto
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