Bank Indonesia explained why officials are so sure that the Rupiah will continue to strengthen in 2023. It is stated that the projection for interbank transactions will increase until this causes the Rupiah exchange rate to grow against the US dollar at closing of IDR 15,159 per US dollar.

The former Minister of Finance of the Republic of Indonesia, Chatib Basri, said that Bank Indonesia has considerable room to reduce BI'sBI'senchmark interest rate on the seven-day reverse repo rate route in the fourth quarter of 2023.

"W" with the Fed raising interest rates to 5% or maybe 6%, there is room for BI to lower its benchmark interest rate at the end of last year, mainly because of falling inflation. Now it is noted that inflation is in the 5% zone from previously around 6%," "aid Chatib Basri.

Chatib also stressed that due to year-end inflation rising slightly, the Fed still has no signs of lowering its benchmark interest rate until the end of 2023. With this, the Republic of Indonesia'sIndonesia'snterest rate space has implications for the pressure on the Rupiah.

Bank Indonesia Keeps Rates Untouched at 5.75% Because Very Confident Rupiah Will Strengthen

Previously, Bank Indonesia explained that there was no need for another rate hike, even though the Federal Reserve intends to raise interest rates another 1-2 times. The Governor of BI, Perry Warjiyo, is also quite confident about stabilising the Rupiah exchange rate.

Despite Bank Indonesia continuing to see the movement of the Fed'sFed'solicy, Bank Indonesia chose to pause today. They are confident that core inflation will stay within the target. Bank Indonesia opted to keep rates untouched at 5.75%.

Bank Indonesia governor Erry Warjiuo also said that the recent rate hike cycle would be stopped. Bank Indonesia also remains confident that the current policy stance is to ensure core inflation remains within target and moderate price pressures are stable.

Furthermore, the surprise 25 bps rate hit today after market participants adjusted expectations for the Fed'sFed'serminal rate. Easing inflation may have convinced Bank Indonesia to shift to a more dovish stance with an additional pause. All of these are used to carry out planned regulations.

It is determined that Bank Indonesia will carry out no further increase in interest rates for mitigation and operations. Even though there was panic at the market's opening because the Rupiah had fallen, Perry Warjiyo remained confident with the increase in Rupiah.

However, one economist and Director of the Center of Economic and Law Studies, Bhima Yudhistira, said, "Bank Indonesia should not be overconfident because external pressures are still quite dynamic, especially from the US market."

"Even if Bank Indonesia is confident not to raise interest rates, it is better if the policies that must be withheld must be implemented immediately. Exchange rate without the need for aggressive interest rates because it is likely that BI will increase 25-50 bps," Bhima.

What are the Reasons Explained by the Boss of Bank Indonesia Regarding the Might of the Rupiah in 2023?

However, it is interesting to discuss what made Bank Indonesia'sIndonesia'soss, Perry Warjiyo, so confident not to raise interest rates again. Bank Indonesia'sIndonesia'secision to keep interest rates at 5.75% and be satisfied with the Rupiah are:

1. Rupiah has economic growth fundamentals, which are good.

2. Indonesia'sIndonesia'snflation is at a low level, and this will provide attractive returns

3. The returns on domestic financial assets are unique, and the attractiveness of returns is quite strong

4. Rupiah exchange rate stabilization policy to control imported goods inflation which is strengthened by the management of export yields (DHE) through the implementation of foreign currency term deposits

5. Uncertainty in global financial markets is getting lower; the main threat is only from the Fed

The Rupiah is expected to continue strengthening, and Bank Indonesia is very confident about this. Furthermore, the inflow of foreign capital has improved the Rupiah Exchange rate and the Indonesian economy. However, Bank Indonesia must be careful with FED policies.

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Bank Indonesia Explains Why Rupiah Will Continue to Hike

Bank Indonesia Keeps Rates Untouched at 5.75% Because Very Confident Rupiah Will Strengthen

What are the Reasons Explained by the Boss of Bank Indonesia Regarding the Might of the Rupiah in 2023?

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