Rupiah strengthens over imminent interest rate drop

Rupiah strengthens over imminent interest rate drop

An officer holds up US dollar and rupiah banknotes at a money changer in Jakarta (ANTARA PHOTO/Galih Pradipta) (Antaranews.com)

If this comes true, the business world or households will be more poised or ready to expand their businesses.
Jakarta (ANTARA) - The rupiah strengthened against the US dollar in the Jakarta interbank market on Friday evening after Bank Indonesia (BI/the central bank) signaled that the interest rate was likely to decline.

The rupiah rose 28 points, or 0.19 percent, to close at Rp14,155 per US dollar compared to Rp14,183 per US dollar earlier.

PT Garuda Berjangka President Director, Ibrahim Assuaibi, remarked on Friday that BI Governor, Perry Warjiyo, signaled the day before that there was still ample room for the BI 7 Day Reserve Repo Rate to fall.

"If this holds true, the business world or households will be more poised or ready to expand their businesses," Assuaibi said.

The central bank's policy to keep its benchmark interest rate unchanged at 6 percent and to lower the reserve requirements by 50 basis points may boost banking liquidity, thereby increasing credit growth to 10-12 percent.

"Of course, this will be a guarantee for better economic growth. Given the prospects for the growing capital flow, coupled with higher economic growth, the rupiah closed higher today," he said.

The rupiah traded at Rp14,130 per US dollar on Friday morning. Throughout the day, the rupiah stayed within the range of Rp14,095 to Rp14,067 per US dollar.

According to the Bank Indonesia mid rate on Friday, the rupiah strengthened to Rp14,116 per US dollar compared to Rp14,236 per US dollar earlier.  

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