Bank Indonesia Sustains Rupiah and Bank Liquidity

 
Bank Indonesia should maintain the exchange rate given the range and liquidity of banking. 
– Economic experts advise Bank Indonesia (BI) to keep the rupiah exchange rate within a determined range and ensure the liquidity of banks to keep Indonesia’s macroeconomic condition stable and hence help the country pull through the global economic turmoil.
Telisa Aulia Falianty, an expert in macroeconomy and monetary affairs at EC-Think, said that the BI Board of Governors Meeting will issue policies aimed at assuring the stability of the country’s macroeconomic condition.
BI, according to Telisa, will announce macro prudential policies connected with the flexibility of capital adequacy ratio to avert a banking bubble in the country.
Umar Juoro, an economic expert at the Center Indonesia for Development and Studies, said that the macroeconomy prudential policy that BI can take is controlling the rupiah exchange rate to move within Rp 8,700-8,800 per US dollar and prevent it from reaching Rp 9,000 per US dollar, otherwise there will be panic in the market despite the country’s strong economic fundamentals.
BI, says Umar, must also ensure that banks remain liquid to prevent a monetary disruption. Inflation rate and investment climate are other matters that BI must attend to.
Perry Warjiyo, Director of Macroecomic Policy and Monetary Studies at BI, confirms that the central bank has already prepared three policies to respond to the current global crisis. The first policy is to control the rupiah’s exchange rate using the country’s foreign exchange reserves. BI will also buy government securities using the rupiah.
The second policy will be to improve the country’s crisis management protocol that will keep the rupiah and banks stable with BI and the central government works together.
The third policy will be to respond to interest rate, monetary and macro prudential policies to mitigate the impacts of the global economic slowdown on Indonesia.