JAKARTA – The Indonesian government and Bank Indonesia (BI) have launched an aggressive new strategy to stabilize the Rupiah against the US Dollar. Following a high-level meeting with President Prabowo Subianto at the Presidential Palace on Tuesday evening (May 5), BI Governor Perry Warjiyo unveiled a comprehensive seven-point plan aimed at strengthening the national currency.
These strategic measures have received full backing from President Prabowo. During a press conference following a limited meeting with the Financial System Stability Committee (KSSK), Governor Perry emphasized that the President has formally approved these initiatives to ensure the long-term stability and strength of the Rupiah.
Curbing US Dollar Speculation
A cornerstone of this new policy is the tightening of US Dollar purchases in the domestic market, specifically targeting transactions made without an underlying physical asset. Bank Indonesia has officially slashed the maximum monthly purchase limit per individual from USD 100,000 to USD 50,000. Furthermore, the central bank is preparing to reduce this threshold even further to USD 25,000. Governor Perry underscored that any purchase exceeding the USD 25,000 mark will strictly require verifiable underlying documentation, a move designed to curb speculative activities in the market.
Market Intervention and Fiscal Synergy
Beyond purchase restrictions, Bank Indonesia is intensifying its intervention in both domestic and offshore foreign exchange markets. Governor Perry reassured the public that the nation’s foreign exchange reserves remain robust and more than sufficient to facilitate market stabilization. The additional strategies include:
Strengthening Capital Inflows: BI is actively encouraging capital inflows through Bank Indonesia Rupiah Securities (SRBI) to offset potential outflows from stocks and government bonds (SBN).
SBN Coordination: In collaboration with the Ministry of Finance, BI continues its ongoing support by purchasing government bonds in the secondary market, a measure that has already totaled Rp123.1 trillion.
Maintaining Liquidity: The central bank is committed to maintaining loose liquidity, keeping primary money growth in the double-digit range, which currently stands at 14.1 percent.
Offshore Market Expansion: Domestic banks are being granted permission to trade Non-Deliverable Forwards (NDF) in international markets to help boost foreign exchange supply.
Rigorous Corporate Oversight
To conclude this strategic package, Bank Indonesia, in partnership with the Financial Services Authority (OJK), will heighten oversight of banking and corporate activities. Specialized supervisory teams will be deployed to monitor corporations that engage in large-scale US Dollar purchases. This proactive approach is intended to maintain the stability of the financial system amidst ongoing global economic fluctuations.
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Summary
Bank Indonesia, with the support of President Prabowo Subianto, has introduced a seven-point strategy to stabilize the Rupiah against the US Dollar. Key measures include tightening foreign exchange purchase limits, reducing the threshold for transactions without underlying assets to USD 25,000, and intensifying interventions in domestic and offshore markets. These initiatives are designed to curb speculative activities while leveraging the country’s robust foreign exchange reserves.
The central bank is also fostering capital inflows through Bank Indonesia Rupiah Securities (SRBI) and collaborating with the Ministry of Finance to support government bonds. Furthermore, liquidity will be maintained with double-digit money growth, while domestic banks are permitted to trade Non-Deliverable Forwards internationally. Enhanced oversight of corporate dollar purchases will be implemented in partnership with the Financial Services Authority to ensure continued financial stability.