JAKARTA: Bank Indonesia (BI) says it’s strengthening efforts to stabilise the rupiah, renewing a pledge to support a near record-low currency two days after its central bank’s chief abruptly resigned.
“The optimisation of the monetary policy mix to maintain the rupiah exchange rate stability has been enhanced” through not only the policy rate but also other monetary instruments, Erwin Hutapea, BI’s executive director of monetary and securities management, said in a statement.
The central bank is doing so in order to contain inflation and support economic growth amid rising global uncertainty, he added.
Hutapea’s comments came as BI Governor Perry Warjiyo’s shock resignation triggered concerns about the country’s policy outlook under President Prabowo Subianto.
Both the rupiah and the country’s stocks have extended declines since the exit of Warjiyo, who had been considered a stabilising force in an economy whipsawed by the government’s populist policy agenda.
“The comment today is standard, but interesting to see they will be refining monetary tools beyond policy rates,” said Wee Khoon Chong, senior Asia-Pacific market strategist at BNY.
The statement affirmed the central bank’s pivot away from interest rates to macro-prudential measures, or could also mean rates may be on hold, he added.
Macro-prudential policy refers to a regulatory approach focusing on maintaining overall financial stability and preventing system-wide risks. — Bloomberg
