USD/IDR: Rupiah keeps range around 14,400 on Bank Indonesia’s status-quo
|Indonesia’s central bank, Bank Indonesia (BI), maintained its benchmark 7-day reverse repo at 3.50% at its March monetary policy meeting held this Thursday, as unanimously expected.
The central bank slashed the interest rates by 25bps in its last meeting, citing that the rate decision was consistent with a low inflation outlook, external stability and effort to support the economy.
The BI Governor Warjiyo said that the domestic economy continues to improve.
Additional comments
US fiscal stimulus, economic growth prospect has led to global market volatility.
That impacted bond yields, currencies including rupiah.
Maintains 2021 GDP outlook at +4.3% to +5.3%.
2021 c/a deficit estimate at 1% to 2% of GDP.
Rupiah movement relatively under control.
Capital inflows have been halted by rising US Treasury yields, stronger US dollar.
To strengthen policy to stabilise rupiah.
Stabilisation measures include triple intervention.
2021 inflation YoY seen within 2%-4% target range.
Liquidity injection amounting to 50.3 trln rupiah as of March 16.
2021 bond purchase in primary market as of march 16 amounting to 65.03 trln rupiah.
State banks still have the highest base lending rates.
Hopes banks can accelerate reduction of credit rates.
FX implications
On the expected status-quo from the central bank, the Indonesian Rupiah (IDR) showed little reaction, as USD/IDR kept its range around 14,400 levels, modestly flat on the day.
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