Rancak Media — Bank Indonesia (BI) is taking decisive action to shield the Indonesian Rupiah from intense pressure and global market volatility. Governor Perry Warjiyo recently unveiled a comprehensive seven-point strategic plan to ensure currency stability, which has received full endorsement from President Prabowo Subianto.
The strategy was formally presented during a high-level meeting at the Presidential Palace on Tuesday (May 5). Governor Warjiyo emphasized that the President’s backing strengthens these measures, which are designed to bolster the Rupiah’s resilience in the face of ongoing international economic uncertainty.
Proactive Market Intervention
The first pillar of the strategy involves sustained intervention in both the spot market and the Domestic Non-Deliverable Forward (DNDF) market. Governor Warjiyo confirmed that Indonesia’s foreign exchange reserves, which stood at a robust USD 148.2 billion at the end of March, remain more than sufficient to serve as a primary tool for these interventions.
To further support the currency, the second step focuses on leveraging Bank Indonesia Rupiah Securities (SRBI) to attract foreign capital inflows. This measure is expected to drive demand for the Rupiah, thereby reinforcing its value against the US dollar.
Strategic Monetary and Fiscal Synergy
Thirdly, BI is intensifying coordination with the Ministry of Finance to purchase Government Securities (SBN) in the secondary market. “We have already purchased IDR 123.1 trillion in SBN year-to-date, and we will maintain this close fiscal-monetary synergy,” Warjiyo explained.
The fourth step aims to solidify the foundation of the Rupiah by ensuring that banking liquidity remains ample. BI continues to prioritize high growth in primary money (M0), which recently reached a year-on-year growth rate of 14.1 percent.
Stricter Controls and Oversight
Recognizing the need for tighter market discipline, the fifth point introduces stricter controls on cash purchases of US dollars. The limit for individuals has been reduced from USD 100,000 to USD 50,000 per month. Additionally, BI is preparing a policy requiring an underlying transaction document for any dollar purchase exceeding USD 25,000.
The sixth measure involves strengthening the offshore Non-Deliverable Forward (NDF) market. By allowing domestic banks to sell NDFs offshore, BI aims to increase the supply of foreign currency, which will contribute to greater exchange rate stability.
Finally, the seventh step involves active collaboration with the Financial Services Authority (OJK) to enhance supervision over banks and corporations with high levels of dollar-purchasing activity. “We are working closely with OJK Chair Friderica Widyasari to ensure the stability of the financial system is maintained,” Warjiyo concluded.
Summary
Bank Indonesia Governor Perry Warjiyo has introduced a seven-point strategy, fully supported by President Prabowo Subianto, to stabilize the Rupiah amid global market volatility. The plan focuses on proactive interventions in the spot and Domestic Non-Deliverable Forward (DNDF) markets, utilizing the nation’s robust foreign exchange reserves. Additionally, the central bank aims to attract capital inflows through Bank Indonesia Rupiah Securities (SRBI) and strengthen fiscal-monetary synergy by purchasing government securities.
To ensure long-term stability, Bank Indonesia is implementing tighter controls on foreign currency transactions and enhancing market oversight. Measures include lowering the monthly limit for individual dollar purchases and requiring documentation for large transactions. Furthermore, the bank is expanding the offshore Non-Deliverable Forward market and collaborating with the Financial Services Authority to closely monitor banks and corporations with high dollar-purchasing activity.
