"The rupiah's exchange rate strengthened along with foreign capital inflows and BI's stability measure," BI Governor Perry Warjiyo stated during an online press conference in Jakarta on Thursday.
The rupiah's appreciation, reaching 0.3 percent point-to-point against May 2021, was also the result of decreasing uncertainty in the global financial markets and the investors' improving perception of the domestic economy, he stated.
Uncertainty in global financial markets has begun to dip coupled with a clear direction of The Fed policies that have remained accommodative and perceived as being too early to reduce monetary stimulus, according to Warjiyo.
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Certainty regarding the Fed's policy to go ahead with the planned purchase of securities until there is substantial development related to inflation and manpower has raised foreign capital inflows to developing countries and pushed the appreciation of currencies in various countries.
Given this development, the BI governor noted that the rupiah weakened by 1.32 percent against the greenback until June 16, 2021 (year-to-date) as compared to the end of 2020, or relatively lower than those of other countries in the region, including Thailand, South Korea, and Malaysia.
"Looking ahead, Bank Indonesia will continue to strengthen its policy to stabilize the rupiah's exchange rate in accordance with the market fundamentals and mechanism through effective monetary operation and liquidity availability in the market," he remarked.
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