Rupiah strengthens as BI's interest rate declined

Rupiah strengthens as BI's interest rate declined

(Illustration) - A teller in a money changer in Jakarta examines rupiah and US dollar bills. (ANTARA FOTO/Puspa Perwitasari/Azizah Fitriyanti)

BI’s decision to decline benchmark interest rate by 25 basis points to 5.75 percent became a positive catalyst for the exchange rate
Jakarta (ANTARA) - The Indonesian rupiah exchange rate traded on the Jakarta interbank market Friday has strengthened with a decline in the Indonesian central bank, Bank Indonesia (BI), benchmark interest rate. At 9.48 a.m. local time, rupiah strengthened 57 points or 0.41 percent to RP13,903 per US dollar, compared to the previous one which was Rp13,960 per US dollar.

An economist from Samuel Asset Management Lana Soelistianingsih stated in Jakarta Friday that BI’s decision to decline benchmark interest rate by 25 basis points to 5.75 percent became a positive catalyst for the exchange rate.

She explained that with this decision, the current account deficit or CAD for Q2-2019 was still relatively safe, considering the balance of trade during Q2-2019 was recorded at US$1.8 billion, enlarged compared to the trade balance deficit in Q2-2018 which potentially widen CAD Q2-2019, compared to CAD Q2-2018 which was recorded 3.02 percent of gross domestic product or GDP.

The trend of BI's benchmark interest rate in the future is likely to decline, Lana added.

“Perhaps there will still be a 25 bps decline to 5.5 percent, until the end of 2019," she said.

Today the rupiah would weaken in the range of Rp13,965 per US dollar to Rp14,000 per US dollar, Lana predicted.

Meanwhile, BI's middle rate Friday showed that the rupiah strengthened to Rp13,913 per US dollar compared to the previous day which was Rp13,976 per US dollar. (INE)

EDITED BY INE
 

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