JAKARTA. The rupiah currency rate strengthened to Rp 9,820 per US dollar on Wednesday, following Bank Indonesia’s (BI) interventions in the financial markets.

During interbank transactions in Jakarta on Wednesday morning, the rupiah strengthened 18 points to Rp 9,820 per US dollar from Rp 9,838.

“In the last two days, BI has been fighting against the markets following increased demand for US currency both for real needs and speculations,” said Samuel Sekuritas economist Lana Soelistianingsih in Jakarta on Wednesday.

Lana said efforts by BI to maintain the rupiah were significant and that the domestic currency was now in a positive area.

Moreover, she said, BI had also increased the overnight deposit facility rate (FasBI) by 25 basis points to 4.25 percent from 4 percent. It was likely that BI would increase the BI rate as a signal to guard against inflation.

“BI’s efforts will be quite effective in the short term. However, the market is still in ‘wait and see’ mode on the government’s plan to increase the subsidized fuel price,” said Lana.

Meanwhile, a financial market expert from Himpunan Saudara Bank, Rully Nova, said economic growth potential could still trigger the strengthening of the rupiah.

According to Rully Nova, the rupiah’s weakening trend during the last several days was caused primarily by external negative factors following the slowing of China’s economy.

Rully said he was sure the weakening of the rupiah was only temporary. Once there was clarity on the range of subsidized fuel price hikes, the domestic rate was predicted to strengthen again. (ebf/The Jakarta Post)

Editor: