Indonesia strives to stop currency’s sharp plunge against USD

 Indonesia has spent 11.9 trillion rupiah (about 796.7 million USD) in total through several market operations to reduce the pressure from depreciated value of the national currency against the USD, the governor of the country’s central bank said on September 5.

Indonesia's national currency rupiah (Photo: VNA)

Indonesia's national currency rupiah (Photo: VNA)

The operations were carried out by buyback mechanism on Indonesian notes (SBN) sold by foreign investors in the last several days, BI Governor Perry Warjiyo said.

The buybacks were conducted on August 30-31 and on September 3-4, he added.

Perry said in a hearing at the parliament that the operations aim to stabilise the foreign exchange market.

The buyback mechanism was part of the central bank's intervention to respond to the rupiah exchange rate against USD, which has developed into a level far from its fundamental range, he said.

Besides the buybacks, BI also conducted interventions in forex trade by assuring sufficient supplies of foreign currencies in the country as well as creating regulations to reduce the costs for firms planning to apply hedging mechanism in their forex asset so as to prevent its value from plunging further, he added.

BI also intensified its communications with firms particularly in encouraging them to put their export revenues in domestic market and preventing them to buy huge sum of foreign currencies for speculation purposes.

The value of the Indonesian currency has drastically dropped to around 15,000 rupiah per 1 USD.

The bank governor said the sharp currency value depreciation in Indonesia was generated by external factors that include the global economy downturn, coupled with rising trade tensions.-VNA

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