The Governor of the Central Bank of Indonesia said on Wednesday that the central bank will continue to intervene in the foreign exchange market to stabilize the rupiah and expects the rupiah to strengthen next year.
On Wednesday, the rupiah recovered some lost ground. By 0603 GMT, the rupiah was trading at 16,265 against the dollar, after having fallen to a four-year low of 16,290, a drop of 0.46%.
Governor Perry Warjiyo made these remarks during a parliamentary meeting discussing economic assumptions for next year, which will be used to prepare the 2025 budget.
Warjiyo said, "Against the backdrop of global turmoil, we are striving to keep the rupiah stable by intervening in the foreign exchange market and raising central bank rates to prevent capital outflows."
He reiterated the forecast for the rupiah this year, expecting it to remain between 15,700 and 16,100, and predicted it would appreciate further to between 15,300 and 15,700 next year as the Federal Reserve's intention to cut rates becomes clearer.
Warjiyo added that the central bank expects the Federal Reserve to start lowering its key policy rate by 25 basis points by the end of the year, and a total of 50 basis points in the first half of 2025.
In April this year, the Central Bank of Indonesia unexpectedly raised rates to support the rupiah, but kept rates unchanged last month as inflation was under control and the rupiah had stabilized.
The central bank's board will meet on June 19 and 20 to discuss interest rate policy.
Warjiyo added that the central bank will continue to closely coordinate with the government to control inflation.
Finance Minister Sri Mulyani said at the meeting that fiscal and monetary policies must respond in sync to market volatility.
Sri Mulyani said, "Both the central bank governor and I believe we need to continue adjusting and synchronizing fiscal and monetary policies as the challenge of balancing policies has become very severe."
She added that these measures aim to support economic growth and manage financial stability.
The government has set an economic growth target of 5.1% to 5.5% for 2025, with a target of 5.2% for 2024.
