BI Intervention Strengthened Rupiah

TRIBUNJATENG.COM, JAKARTA – Rupiah’s exchange rate climbed to 0.28 percent against US Dollar at the spot market closing on Thursday (1/3). A small amount of intervention from Bank Indonesia, managed to lift the Garuda’s currency rate, to Rp. 14,405, better than the previous day's trade. On Thursday (3/1) at 3:00 p.m., US Dollar is valued at Rp. 14,430. Then, Rupiah strengthened 0.1% compared to the previous day's closing position.


"BI’s intervention in the DNDF market strengthened Rupiah," said Head of the Bank Indonesia Monetary Management Department, Nanang Hendarsah, to CNBC Indonesia on Thursday (1/3). At closing, the exchange rate of 1 US Dollar was valued at Rp. 14.405. Rupiah strengthened as much as 0.28% compared to the trading closing position on the previous day.


According to Nanang Hendarsah, Bank Indonesia managed to make Rupiah stronger after having a rather weak trading day. “Our strategy was to open a DNDF [Market Domestic Non-Delivery Forward] auction at 8:30 a.m. with a fixed exchange rate, and after the auction completed it was continued with DNDF intervention via 8 brokers in significant amount. Intervention in the spot market was only a small amount for signaling executed in the right time, "Nanang said.


DNDF is a Domestic Non-Delivery Forward hedging instrument. "BI placed DNDF offers in 8 brokers," Nanang said. Based on this statement, intervention in the spot market was only in small quantities. Nanang said, the weakening of Rupiah was influenced by several factors. "This condition was triggered by the fear of the decelerating global economy, Rupiah at the beginning of trading was also under pressure. Bank Indonesia took a stabilizing step to ensure that the weakening was not significant. Eventually, rupiah got stronger during the afternoon," Nanang said.


"The incoming bid at the DNDF auction at 08.30 WIB reached US$ 174 million," said Nanang. During the morning trade, at 09:35 a.m., Rupiah exchange rate’s progress was observed to drop 0.26%. This brought Rupiah to the level of Rp. 14,488 per US Dollar. Not only against the US dollar, but Rupiah was also weak against Euro and major Asian currencies.


Against Euro, Rupiah declined 0.31% while against major Asian currencies such as Chinese Yuan (-0.14%), Hong Kong Dollar (-0.16%), Japanese Yen (-1.84%), and Singapore Dollar (-0.25%) Rupiah was also struggling.


Japanese Yen was the currency with the biggest gain against Rupiah because, now, Yen becomes the primadonna for investors. FX Strategist at Credit Agricole, Eric Viloria, said that, currently, investors prefer using Yen as a safe haven to US Dollar and Euro.


"Yen as a safe haven also received supports from the non-stop concerns about the extension of the United States government’s closure," quoted by Reuters.


Investors' trust on Yen even made the US Dollar more than 1% depressed against Japanese Yen. RTI trade data noted that US Dollar dropped 1.65% against Japanese Yen followed by another drop of 0.04% against Singaporean Dollar.


Editor: Catur Waskito Edy