INDONESIAS central bank is confident that the rupiah currency will continue to regain ground against the dollar until the end of 2024, as capital inflows have returned after its recent unexpected rate hike, its governor said on Friday (May 3).

The rupiahs appreciation will continue from now on until end of the year if we look at market data, Bank Indonesia (BI) governor Perry Warjiyo told a joint press conference with other Indonesian financial regulators, referring to exchange rates for non-deliverable forward transactions.

He repeated that BI thinks the rupiah exchange rate is heading toward 16,000 a dollar in the near term, before further strengthening to 15,800.

The rupiah closed at 16,080 per dollar on Friday, firming 0.62 per cent from its previous close, but it has still lost about 4 per cent against the buoyant US dollar so far this year as expectations of Federal Reserve rate cuts in 2024 dwindle.

BI last month delivered a surprise rate hike to support the rupiah, after it fell to four-year lows amid risk-off sentiment in global markets.

Starting next week, BI will also increase auctions of its rupiah securities, known as SRBI, to twice a week from once a week, to attract more capital inflows, the governor said.

Warjiyo said Indonesias economic prospects would further bolster market confidence on the rupiah. He predicted Indonesia will maintain GDP growth at above 5 per cent this year, with low inflation.

South-east Asias largest economy grew 5.05 per cent last year. The statistics bureau is due to release first-quarter GDP data on Monday. REUTERS

Source : www.businesstimes.com

May 4, 2024