REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia's governor has urged economic participants in the country not to panic over the depreciation of the rupiah to 12 thousand against the US dollar.
"We must remain calm and continue our activities as before. The rupiah's depreciation to 12 thousand against the US dollar is mainly because of global conditions," central bank governor Agus Martowardojo said here on Friday.
He said global unease, especially about the Federal Reserve's tapering of monetary stimulus, is contributing to pressure on the exchange value of the rupiah.
"The US Federal Reserve is deciding whether or not it should taper its monetary stimulus. There have been good and bad economic indicators and investors are still uncertain about what will happen. That is affecting the value of the rupiah," he added.
The governor noted that, in general, economic conditions in industrial nations are likely to improve. The crisis situation in Europe will also ease, he predicted.
"In Europe, consumer confidence has begun to improve," he added.
In developing countries, however, pressures on growth are expected to continue, he said.
"In Indonesia, the pressure on the exchange rate is because demand for the dollar is high. Several investors opt to change their investment positions at the end of the month. So, we believe that this is a temporary phenomenon," he pointed out.
Agus emphasized that the current rupiah depreciation is not reflective of the country's economic fundamentals.
"When the rupiah weakens, it happens in tandem with a weakening in the value of other regional currencies. Some currencies have depreciated even further than the rupiah," he noted.
The governor pointed out that in structural terms, several challenges have affected the rupiah, in particular Indonesia's current account deficit for the past 26 months.
"This has to be addressed by the government and Bank Indonesia. We believe the improving deficit in the third quarter indicates progress," he added.
In inter-bank trading on Friday morning, the rupiah was steady at 12,018 against the US dollar.
Ikuti Whatsapp Channel Republika