By Stefanno Sulaiman
JAKARTA (Reuters) – Indonesia’s central bank will continue to intervene in the currency market to stabilize the rupiah, the governor said on Wednesday, adding the currency would strengthen next year.
The rupiah pared some of its losses on Wednesday to stand at 16,265 per dollar at 0603 GMT, after weakening as much as 0.46% to a four-year low of 16,290.
Governor Perry Warjiyo’s comments came during a House meeting to discuss next year’s economic assumptions that will be used in preparing the 2025 budget.
“Amid global turbulence, we continue efforts to maintain the rupiah exchange rate by intervening in the foreign exchange market and raising central bank interest rates to prevent foreign outflows,” Warjiyo said.
Warjiyo reiterated expectations that the rupiah will trade in a range of 15,700 to 16,100 to the dollar this year, while he expects it to rise further to between 15,300 and 15,700 next year as the US Federal Reserve’s intentions to tighten interest rates to decrease become clearer.
The central bank forecasts that the US Fed will cut its key policy rate by 25 basis points at the end of the year, followed by a total of 50 basis points in the first half of 2025, Warjiyo added.
In April, Bank Indonesia (BI) made a surprise rate hike to support the rupiah, but kept rates steady last month as inflation was under control and the rupiah had stabilized.
The board of directors will then meet on June 19 and 20 to discuss interest rate policy.
The central bank will continue its close cooperation with the government to control inflation, Warjiyo added.
Fiscal and monetary policies need to be aligned to respond to market volatility, Finance Minister Sri Mulyani said at the meeting.
“The central bank governor and I both see that we need to continue to coordinate and synchronize fiscal and monetary policies as the balancing policy challenges are becoming very tight,” Sri Mulyani said.
The measures taken were intended to support economic growth and manage financial stability, she added.
The government has proposed an economic growth target of 5.1% to 5.5% for 2025. The target for 2024 was 5.2%.
