Bank Indonesia Governor Says Will Continue To Guard Rupiah

 
   By I Made Sentana 
 

        JAKARTA--Bank Indonesia will continue to guard the rupiah's volatility but doesn't aim to keep it at a certain level against the U.S. dollar, central bank Governor Agus Martowardojo said Friday, as the local currency fell to its lowest level in 17 years.
        "Bank Indonesia will be always in the market to guard the rupiah volatility to maintain the public confidence in our currency. But we don't defend the rupiah at a certain level [against the dollar]," Mr. Martowardojo told reporters. But, he declined to confirm if the central bank sold dollars in the market lately.
        The governor attributed the rupiah weakness to external factors such as the expectation that the U.S. Federal Reserve will raise interest rates, Greece's debt crisis as well as concern over China's financial market that aren't only affecting the rupiah but also other regional currencies.
        Mr. Martowardojo said the pressure on the rupiah will likely be temporary as Indonesia's economic fundamentals are mostly improving. He referred to improvement in Indonesia's current-account deficit, which he predicted to have narrowed to less than 2.3% of gross domestic product in the second quarter, compared with 4.4% in recent years, while inflationary pressures are easing.
        The governor said that Indonesia has received 67 trillion rupiah ($4.99 billion) in capital inflows during the January-June period. "Although the inflow dropped from 140 trillion rupiah (during the same period last year), the fact that we still received capital inflows, which showed that investors are still confident on Indonesia," the governor added.
        The rupiah was traded at 13,440 to the dollar currently, compared with 13,420 close Thursday.
        Write to I Made Sentana at i-made.sentana@wsj.com.
        (END) Dow Jones Newswires

        July 24, 2015 04:24 ET (08:24 GMT)

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