Indonesia's Central Bank Vows to Intervene as Rupiah Plummets to Record Low
JAKARTA: In a decisive move to bolster its currency, Indonesia's central bank has announced plans to take robust action to stabilize the rupiah, which recently hit an alarming record low against the US dollar. The announcement was made by Senior Deputy Governor Destry Damayanti on Wednesday, following a series of tumultuous events in the global economic landscape.
As of Wednesday morning, the rupiah plummeted to a staggering 16,970 per dollar, a figure that marked the lowest it has ever been recorded. Although it managed to recover slightly later in the day, the situation has prompted the central bank to consider interventions in various segments of the financial market, including the spot, domestic non-deliverable forwards, and bond markets. Destry emphasized to Reuters that these interventions are crucial to restore confidence among investors and to stabilize the currency.
Despite the downturn of the rupiah, Destry noted an encouraging sign: movements in domestic bonds on the same day indicated that investors still maintained a level of confidence in Indonesia's sovereign bond market. This suggests that while the currency may be struggling, the overall sentiment towards Indonesiaâs financial instruments remains relatively robust.
The dramatic drop in the rupiah is largely attributed to the escalating global trade tensions, particularly influenced by President Trump's recent decision to sharply increase tariffs on Chinese goods by an unprecedented 104 percent. Destry pointed out that this move has not only affected the rupiah but has also contributed to a weakening of other regional currencies. Nevertheless, she asserted that the domestic economy is holding strong in the face of these external pressures.
This latest decline in the rupiah marks the second consecutive day it has reached record low levels, raising concerns about the potential impacts on Indonesia's economic stability. The financial markets had already been jolted by the tariff announcements the previous Tuesday, particularly as they reopened after a long holiday break. Investors are now keenly watching the central bankâs next steps to see how they will respond to these ongoing challenges.
