Indonesia intervenes as rupiah nears 16,000 per dollar level

Published Fri, Nov 15, 2024 · 074 PM

INDONESIA’S central bank intervened in currency markets to support the rupiah after it weakened towards the psychological level of 16,000 per US dollar.

Bank Indonesia is intervening in the spot currency, domestic non-deliverable forwards and the government bond market to support the rupiah, executive director for Monetary and Asset Securities Management Edi Susianto said in a text message on Friday (Nov 15). The rupiah pared an earlier loss of as much as 0.6 per cent to trade at 15,897 per dollar as of 1.25 pm in Jakarta.

“BI continues to guard the market through triple intervention to maintain market confidence,” he said. The dollar supply in the market is still decent, he added.

The intervention comes as investors pulled more than US$1.2 billion from Indonesia’s markets this month amid fears that the US president-elect’s “America First” policies will lift US inflation and force the Federal Reserve to temper its rate cuts. That’s adding to expectations that Bank Indonesia will refrain from policy easing at next week’s meeting.

The central bank has said the rupiah’s fundamental level is stronger than 16,000 per dollar. Currency stability is seen as a precursor to any rate cuts.

“We push back our 25 basis points rate cut call to December from November,” Aldian Taloputra, a senior economist at Standard Chartered in Jakarta, wrote in a note to clients.
Authorities may strengthen market operations to attract inflows and anchor the rupiah in the near term, he added. Persistently high US Treasury yields are “likely to lead to more cautious monetary easing by BI,” Taloputra said.

The yields on BI’s rupiah notes, a key market tool it uses in tandem with policy rate, rose further at a Friday auction. The 12-month bills sold with an average yield of 7.07 per cent, the highest since Sep 13, according to data compiled by Bloomberg. BLOOMBERG