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Foreign Funds Keep Flowing In

From The Jakarta Post
March 5, 2015

“While the rupiah has depreciated against the US dollar like many other Asian currencies, the rupiah is largely stable on a real effective exchange rate basis,” Chua Hak Bin, an economist with Bank of America Merrill Lynch, said on Tuesday.

A fixed-income analyst with Trimegah Securities, Dini Agmivia Anggraeni predicted that foreign investors could still tolerate rupiah swings of up to 5 percent on the year-to-date average rupiah value of 12,800 per US dollar. “Foreign investors appear to remain optimistic on the rupiah outlook,” she said.

On Tuesday, foreign analysts were gathered by BI senior deputy governor Mirza Adityaswara  in Singapore for a briefing that focused on the central bank’s monetary stance and its rupiah-intervention strategy.

“To encourage this shift toward manufacturing exports and discourage unnecessary imports, the central bank is inclined toward an undervalued rupiah,” Saktiandi Supaat, Maybank analysts wrote in a report distributed to their clients.

A study by BI has shown that every 1 percent rupiah depreciation against the dollar boosts Indonesia’s exports by 0.1 percent and reduces imports by 0.3 percent.

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