The rupiah soars after central bank rules out intervention

By Hazel Davis

Indonesian currency rallies to its highest level in almost 21 months

                                

The Indonesian rupiah has rallied to its highest level in almost 21 months. The currency has advanced 0.6 per cent to 13,772 to a dollar, the highest it’s been since April 2018.

Bank Indonesia’s (BI) executive director for monetary management, Nanang Hendarsah, told Reuters that the bank “will give room for the rupiah to strengthen along with market mechanisms.” He said, “Fundamentally, the rupiah is not yet overvalued.”

Despite global uncertainty, foreign investors still saw fit to buy 5.6trn rupiah ($407m) of bonds from the secondary bond market on Thursday, according to Hendarsah, taking this year’s total to 10trn rupiah this year.

The currency was relatively more stable throughout 2019 compared with 2018, closing the year 3.6 per cent stronger.

Bahana Sekuritas economist Satria Sambijantoro said in a note that he expected the currency’s resilience to continue in 2020, “paving the way for more piling up of foreign exchange reserves”.

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