Sunday 07, October 2018 by Bloomberg

Indonesia pledges more action as currency continues to slide

 

Bank Indonesia will take steps to stabilise the currency and ease volatility.

Indonesia stands ready to respond to global risks brought about by an intensifying trade war and rising US interest rates that have driven the nation’s currency to a two-decade low, officials said.

The government will coordinate its policy response with the central bank and the financial services authority, Finance Minister Sri Mulyani Indrawati told reporters in Jakarta on Friday. Bank Indonesia will take steps to stabilise the currency and ease volatility, according to Governor Perry Warjiyo.

Indonesia’s currency is among the worst performers in Asia this year, tumbling to its lowest level since the Asian financial crisis in 1997-98, even after officials have implemented measures from import curbs and interest-rate hikes. The central bank has delivered 150 basis-points of rate increases since May and drained billions of dollars from its foreign reserves.

The reserves fell for an eight straight month to $114.8 billion, the lowest level since November 2016, data released by Bank Indonesia showed on Friday.

The rupiah retreated 1.9 per cent this week, its worst-weekly performance since May 2016. The benchmark Jakarta Composite Index slumped 4.1 per cent, capping its first weekly decline in four, while the yield on benchmark 10-year government bonds rallied 26 basis points this week, the most since August, data compiled by Bloomberg show.

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