"According to our preliminary calculation, the rupiah may strengthen below Rp9,000 per dollar without disrupting the competitive edge of our exports and BI`s balance sheet," BI Deputy Governor Hartadi A Sarwono.Jakarta (ANTARA News) - Bank Indonesia (BI) said the rupiah still has a chance to strengthen below Rp9,000 per dollar following the central bank`s decision to raise its key interest rate to 6.75 percent from 6.50 percent previously.
"According to our preliminary calculation, the rupiah may strengthen below Rp9,000 per dollar without disrupting the competitive edge of our exports and BI`s balance sheet," BI Deputy Governor Hartadi A Sarwono said here on Monday.
He said BI had predicted the rupiah would strengthen against the dollar when it raised the benchmark interest rate, locally known as BI Rate, last Friday (Feb 4). The BI decision to raise the key rate encouraged foreign investors to again buy the local unit.
The rupiah`s appreciation was badly needed to curb inflationary pressure fueled by imported inflation, he said.
"The rupiah`s appreciation is still tolerable, provided the currencies of our trade rivals also strengthen against the dollar," he said.
He said BI did not worry that foreign capital inflows would raise its monetary cost which would eventually cause the deficit of its balance sheet to soar.
"For the central bank, macro stability is above all. Of course, we must try to minimize pressure on the BI balance sheet but the main priority is national economy," he said.
Commenting on BI`s decision to raise its key rate by a quarter percentage point to 6.75 percent early this month, he said it was caused by a rapid change in expected inflation due to the increase in global food commodities and crude oil.
"Unless we give a signal by raising the BI Rate we fear inflationary pressure in the future cannot be controlled," he said.
BI had kept the key rate unchanged at 6.50 percent for the eighteenth month in a row since August 2009.(*)
Editor: Heru Purwanto
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