Rupiah stabilizing but
risks remain: BI
risks remain: BI
Satria Sambijantoro, The Jakarta Post, Jakarta |
Business | Sat, March 28 2015, 12:28 PM
Business News
As the rupiah has stabilized(present
perfect tense[S {the
rupiah} + have/has + v3(past
participle){stabilized}]) in recent days, Bank
Indonesia (BI) says it will not become(Present Future
tense[S {it} + will (not) + v1 {become}]) complacent, citing
the seasonal increase in dollar-demand that will reach(future tense[S {that} + will + v1{reach}) its climax. BI Governor Agus
Martowardojo says the future movement of the rupiah in coming months would
be influenced(past
future tense [S{the rupiah} + would + be +
v3{influenced}]) not only by external dynamics, such as
economic developments in the US or China, but also domestic factors, notably
the potential increase in dollar demand among on shore corporations.
“In Indonesia, we have a cyclical pattern (Present Perfect
Tense [S{We} + have + v3 {cylical}]) between March and June when there will be a risein
foreign-debt payments and earnings repatriation,” BI Governor Agus
Martowardojo told reporters (simple
past tense[S{Agus
Martowardojo} + v2{told}]) on Friday.
Having taken a battering earlier this month, the rupiah has stabilized(present perfect tense[S{the rupiah} + have/has + v3/past participle{stabilized}) of late as foreign fund inflows returned after an easing of concerns that the US central bank would soon hike(past future tense[S {US ceentral bank} + would + v1 {hike} ]) its interest rate. On Friday, the rupiah traded(simple past tense[S {the rupiah} + v2 {traded})at 13,064 per dollar, relatively unchanged compared to earlier this week, when it stood(simple past tense[S {it} + v2 {stood} ]) at 13,067 per dollar, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).
Having taken a battering earlier this month, the rupiah has stabilized(present perfect tense[S{the rupiah} + have/has + v3/past participle{stabilized}) of late as foreign fund inflows returned after an easing of concerns that the US central bank would soon hike(past future tense[S {US ceentral bank} + would + v1 {hike} ]) its interest rate. On Friday, the rupiah traded(simple past tense[S {the rupiah} + v2 {traded})at 13,064 per dollar, relatively unchanged compared to earlier this week, when it stood(simple past tense[S {it} + v2 {stood} ]) at 13,067 per dollar, according to the Jakarta Interbank Spot Dollar Rate (JISDOR).
Last week, the currency depreciated (simple past tense[S {the currency} + v2 {depriciated}]) to 13,209 per dollar,
the weakest level since the 1998 Asian financial crisis when the country
recorded(simple
past tense[S {the country}
+ v2 {recorded}]) at least US$1 billion
of fund outflows from the bonds market.
·
March-June high season for foreign debt payments and earnings repatriation
·
Despite recent selling-off, BI believes RI’s financial market remains in
good shape
·
BI to intervene in the market to anchor currency stability mid-year
“In the first two
weeks this month, there has been pressure [on the rupiah] due to outflows, but we
are now seeing(present
continues tense[S {we}
+ tobe {are} + v1-ing {seeing}]) returning inflows in the third week,”
said Agus.
Despite the recent selling-off pressure, the Indonesian financial market
remained(simple
past tense[S {the indonesian
financial market} + v2 {remained}])
in good shape as it
still registered a net foreign inflow of Rp 42 trillion ($3.2 billion) year-to-date,
the BI governor added. Foreign investors have bought(present perfect tense[S {foreign investors} +
have/has + v3 {bought}]) at least Rp 5
trillion in Indonesian government bonds in the past two weeks, Finance Ministry
data shows. That has led(present
perfect tense[S {That}
+ have/has + v3 {led}) to a stabilization in
one-month volatility for the rupiah, a measure of currency swings, which
dropped 27 basis points this week to 12.07 percent, Bloomberg reported.
In response to the
surging dollar demand in the middle of the year, BI would intervene(past future tense[S {BI} +would+v1 {intervene}]) “significantly” in
the market to ensure currency stability, Senior Deputy Governor Mirza
Adityaswara said on Friday. He said the central bank would not loosen(past future tense[S {the central bank}+Would
+ not +v1 {loosen}) its grip on the rupiah in an attempt to
pile up its foreign exchange (forex) reserves.
Despite the depreciating rupiah, BI’s forex reserves have been on the
upward trend, touching $115.5 billion by the end of March compared to $111.8
billion earlier this year, prompting suggestions that the central bank had
scaled(past
perfect tense[S {the
central bank} +had+v3{scaled}) back its market
intervention and had would tolerate currency depreciation.
“Some people have argued(present perfect tense[S {some people} + have/has
+ v3 {argued) that BI did not
intervene(past
tense[S {BI} + did
+ not + v1 {intervene}])) in the market because
it focused(past
tense[S {it} + v2 {focused}])) on piling up its
reserves,” the senior deputy governor noted.
“What’s worth highlighting here is that BI is serious in the market(present tense [S {BI} + be + v1 {serious}+ O {the market}]), is serious to guard the rupiah. We are ready to intervene (present tense [S {We} + be + v1 {ready} + O {intervence}]) if there’s any turbulence in the financial market,” stated Mirza.
“What’s worth highlighting here is that BI is serious in the market(present tense [S {BI} + be + v1 {serious}+ O {the market}]), is serious to guard the rupiah. We are ready to intervene (present tense [S {We} + be + v1 {ready} + O {intervence}]) if there’s any turbulence in the financial market,” stated Mirza.
Helmi Arman, the chief economist of Citibank in Indonesia, predicted(past tense[S {Helmi Arman} + v2 {predicted}])the rupiah’s
depreciation would have limited(past future perfect tense[S {the rupiah’s depreciation} +would+have+v3
{limited}]) pass-through to
imported inflation, but warned the central bank that the impact would likely be
felt in consumer sentiment and economic growth. There would be a risk that the
rupiah’s depreciation could further impact household spending and exacerbate
the declining growth rate of household consumption, he explained.
“Businesses can also
see the cost of capacity-expansion rising as industrial machinery is mostly
imported,” Helmi wrote in a research note. “Amid reduced(past tense[S {Amid} + v2 {reduce}])optimism on
consumption growth, some businesses may well opt to wait and see, thereby
delaying their expansion plans.”
- See
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