Reasons of Why Rupiah is Improving

Dian Ihsan Siregar    •    09 Oktober 2015 15:18 WIB
economic growth
Reasons of Why Rupiah is Improving
Photo: Media Indonesia, Jakarta: The flow of rupiah is getting better day by day. Several factors, both domestic and foreign, have become the booster for the Garuda currency strengthening.

The positive impact of the third economic policy package published by the government still maintains the flow of rupiah against US dollar to be within the green zone. Rupiah holds its rising trend.

"Market players also responded to the monetary policy delivered by Bank Indonesia  (BI) in September," mentioned the Head of Research from NH Korindo Securities Indonesia, Reza Priyambada, in his research statement received by, Friday (10/9/2015).

He thinks that the positive perception on the results of the policy may temporarily provide fresh air to the rupiah flow trying to maintain its strengthening pattern.

Reza again mentioned the five monetary policy released by BI. The first package is to strengthen inflation and pushing the real sector from the supply side, among others to strengthen the coordination of the Inflation Management Team, both in the central or regional bases to accelerate the implementation of the national inflation management roadmap.

Related to the rupiah stabilization or the second monetary package, maintaining the expectation of forex and bonds players by conducting interventions in keeping the volatility of the currency at a safe level, as well as purchasing state bonds (SBN) in the secondary market.

The third monetary policy, is to strengthen the rupiah liquidity management through the change of auction mechanism by changing the mechanism of reverse reposition agreement (repo) or state bonds selling owned by BI to the bank, from the variable rate tender to fix rate tender and republishing the Indonesian Bank Certificate with the period of 9 to 12 months with a fixed rate tender auction, as well as adjusting to the pricing.

Fourth package is that BI tries to strengthen the management of foreign exchange from the demand and offer by adjusting the auction frequency of Foreign Exchange Swap from twice a week to once a week, changing the auction mechanism of Term Deposit Foreign Exchange from variable rate tender to fixed rate tender, adjusting the price and extending the tenor to three months.

"BI also lowered the limit of forex purchase with the prove of underlying documents from the current US$100,000 to US$25,000 per client per month, and entitling NPWP use, as well as accelerating the approval process of the bank's foreign debts while paying attention on the precautions measure," he elaborated.

The fifth package is on the efforts of deepening the financial market. The actions conducted by BI, are to cover the swap hedging facility supply to support the infrastructure investments, as well as strengthening forex reserve.

"BI also perfected the regulation on financial market, which covers the entire components of market development, among others the instruments, players and infrastructure," he stated.

He then conveyed that the steadiness of Japanese monetary policy, increasing world oil price and the improving euro flow, have also provided positive sentiment towards rupiah movement. Reza also hoped that the sentiment would continue to maintain the follow up rising trend.


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