BI saw that the pressure from the current political situation will only be temporary.
Jakarta (ANTARA News) - The rupiah has been under pressure for the past few days as the countrys financial market is not yet deep in addition to external and domestic economic problems, stated a Bank Indonesia (BI) official.

"Indeed, the financial market in Indonesia is not yet deep as its volume is still small," the central banks senior deputy governor, Mirza Adityaswara, remarked when asked to comment on the current rupiah depreciation at the BI compound here on Friday.

In the past few days, the rupiah exchange rate has dropped to around Rp12 thousand against the US dollar.

Mirza pointed out that foreign exchange supply was relatively small, and so it failed to meet the high demand in the market.

"At the foreign exchange spot market, when conditions are good, the supply can reach US$2 billion a day. But, when the market is under pressure, it is recorded at only around US$800 million to US$1 billion a day," he added.

Mirza claimed that currently, the rupiahs volatility is still under normal level.

"Indeed, the exchange rate is a little bit above the BI level set at Rp11.6 thousand to Rp11.8 thousand per US dollar in the 2014 revised budget," he emphasized.

Mirza stated that the rupiah depreciation was also caused by the geopolitical condition in Iraq that has affected the sentiment towards the US dollar.

He said other factors that had affected the rupiah exchange rate were the countrys economic fundamentals.

According to Mirza, the trade deficit was recorded at US$1.96 billion, although a surplus was forecast in May, albeit a small one.

Mirza was of the viewpoint that pressure on the rupiah resulting from the current political conditions in the country was still temporary.

One of BIs efforts to stabilize the rupiah exchange rate was focused on convincing the investors that the upcoming presidential election on July 9 will proceed peacefully similar to the three previous elections, Mirza remarked.

"BI saw that the pressure from the current political situation will only be temporary. What has to be settled are things related to our economic fundamentals or how to reduce the current account deficit," he reiterated.

(Reporting by Citro Atmoko/Uu.H-YH/INE/KR-BSR/S012)

Editor: Priyambodo RH
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