JAKARTA (Yosefardi) – For helping the rupiah from further correction against the US dollar, Agus said, Bank Indonesia (BI) mulls to tighten the control on foreign currency (forex) transaction, mainly the US dollar.
The rupiah was traded flat at Rp13,824 against the US dollar on Wednesday. But year to date, the rupiah has weakened by more than 10%.
Agus noted that the transaction in US dollar has surged, especially transaction for less than US$100,000 value. BI will allow the purchase of US dollar without underlying transaction to maximum US$25,000 per month, instead of maximum US$100,000 per month.
Agus said BI will release new regulation on forex transaction aiming to avoid the speculation. BI would only support the forex transaction for economic purposes.
BI also considers the recent rupiah volatility a result of overshooting that has left the currency undervalued. Recent rupiah volatility is a direct consequence of global economic developments.
Agus noted the rupiah was traded at average Rp13,400 against the US dollar during the second quarter of 2015 or Rp13,000 during the first half, mostly due to external factors, affecting the rupiah depreciation.
The China economic slowdown and expected hike of Fed rate are 2 main factors hitting the local currency, Agus noted. China posted 10% growth of its economy in the past ten years, but now its growth has declined to 7% last year and 6.7% this year. The drop in commodities prices also hit the rupiah.
So, Agus said, Indonesia should prepare to face the era of currency war following China’s decision to devaluate its yuan.