Indonesian Finance Minister Sri Mulyani Expects Stable Rupiah Outlook
Stable Rupiah Exchange Rate Predicted by Indonesia’s Finance Minister
Indonesia’s finance minister Sri Mulyani Indrawati expressed optimism on Tuesday, stating that the rupiah exchange rate is expected to remain stable with an upside bias. She noted that the pressure from a strong dollar has started to ease, leading to this positive outlook.
Comments from the Financial System Stability Committee
Sri Mulyani, who also chairs Indonesia’s Financial System Stability Committee, made the comments during a press conference. The committee includes the finance ministry, the central bank, the Financial Services Authority, and the deposit insurance corporation.
Factors Contributing to Rupiah Stability
The finance minister attributed the expected stability of the rupiah to the easing pressure from a strong dollar. She highlighted that the recent decline in the U.S. currency’s strength, driven by expectations of interest rate cuts by the Federal Reserve, has been a contributing factor.
Rupiah Performance and Fiscal Outlook
As of 04:34 GMT, the rupiah had advanced 0.16% to 15,780 against the dollar, reaching its strongest level in the last four days. This positive development follows a recent slump in the rupiah, which dropped to a 2-1/2-month low of 15,845. The decline was prompted by speculations about Sri Mulyani’s possible resignation ahead of the Feb. 14 presidential election, raising concerns about the country’s fiscal outlook.
Strengthening Rupiah Predicted by Bank Indonesia
Bank Indonesia (BI) governor Perry Warjiyo shared the central bank’s optimistic outlook, stating that the rupiah is expected to strengthen in the second half of 2024. He also emphasized that BI will continue to intervene in the foreign exchange market to stabilize the rupiah, affirming the bank’s commitment to ensuring the currency reflects its fundamental level.
Monetary Interventions and Economic Growth Expectations
- The governor disclosed that BI has been purchasing bonds in the secondary market to sterilize its foreign currency intervention, having already bought 8.8 trillion rupiah ($557.49 million) worth of bonds in 2024.
- Sri Mulyani anticipates Indonesia’s economic growth for 2023 to be around 5%, with the official data set to be released on Feb. 5. For 2024, the government has targeted an economic growth rate of 5.2% in President Joko Widodo’s final term.
($1 = 15,785.0000 rupiah)
