First, a pre-emptive, front-loading and ahead-of-the curve policy response would be pursued to stabilise the rupiah exchange rate, while consistently maintaining low and controlled inflation within the 2018-2019 target corridor of 3.51 per cent, said the Bank Indonesia Governor, Perry Warjiyo, in a statement here on Wednesday.
Second, dual intervention in the foreign exchange market and SBN market would constantly be optimised to stabilise the rupiah exchange rate along with fair price adjustments in the financial markets, while maintaining adequate liquidity in the money market.
Third, the monetary operations strategy would be oriented towards maintaining adequate liquidity, particularly in the rupiah money market and inter-bank swap market.
Fourth, intensive communication with market players, the banking industry, business community and economists would be used to form rational expectations, thus helping to mitigate the rupiah overshooting the currency's fundamental value, said Perry.
In addition, to maintain and build the current pace of domestic economic growth momentum, Bank Indonesia was preparing follow-up measures to ease macroprudential policy, while also working with the Coordinating Ministry for Economic Affairs, the Ministry of Finance and the Financial Services Authority (OJK) to accelerate financial market deepening, particularly for private sector infrastructure financing.
President Joko Widodo earlier said fluctuations of currencies including the rupiah against the U.S. dollar was a global phenomenon faced by almost all countries other than the United States.
The President said he had asked the Coordinating Minister for Economy and the Finance Minister to take concrete steps to control rupiah fluctuations. Widodo said he appreciated the anticipatory steps taken by Bank Indonesia to forestall impact of the fluctuations.
"I believe Bank Indonesia has taken the right steps with its monetary policies," he said.
The government itself continued to prepare steps within its area or authority to help Bank Indonesia to prop up the rupiah, which had lost much its value against the dollar over the past month, said Widodo.
He said he was pleased to note that thanks to the steps taken, the rupiah began to regain some of its losses in value lately. "Yes, thanks God, yesterday we saw the rupiah began to strengthen to the level of less than 14,000 per dollar," he said.