Indonesia back to intervention as currency drops most since June
December 06 2018 09:44 PM
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A money changer
A money changer waits for customers on a street in central Jakarta. The rupiah retreated as much as 1.2% to 14,570 per US dollar yesterday.

Bloomberg/Jakarta

Indonesia’s central bank intervened to support the currency after the rupiah tumbled the most in more than five months.
Bank Indonesia is intervening in the currency and sovereign bond markets to ease volatility, Nanang Hendarsah, executive director for monetary management, said in a mobile-phone message yesterday. That was the first intervention in more than a month.
“Bank Indonesia sees the current depreciation as temporary, a knee-jerk jittery reaction to selloff in global stock markets,” Hendarsah said. With 10-year US treasury yields down and a more dovish Federal Reserve, emerging markets’ assets should appear more attractive, he said.
The rupiah retreated as much as 1.2% to 14,570 per US dollar yesterday, the biggest intraday decline since June, according to data compiled by Bloomberg.
The return of market volatility underscores the need for Bank Indonesia to remain vigilant. The central bank raised interest rates 175 basis points since May to curb losses as the rupiah suffered from an emerging-market rout.
The central bank has purchased 106tn rupiah ($7.3bn) of sovereign bonds this year, raising the stocks of bonds that it owns to 220tn rupiah, Hendarsah said. The monetary authority will continue to monitor rupiah and government bonds and take measures to stabilize the market, he said.



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