Indonesia's central bank is taking a cautious approach toward supporting the rupiah to avoid putting undue pressure on domestic liquidity, The Jakarta Globe reported Tuesday citing Governor Perry Warjiyo.
"We learned from the 1997-1998 and 2008 crises that excessive intervention to stabilize the rupiah could drain liquidity. It may stabilize the currency, but it also creates liquidity shortages," Perry reportedly said at a parliamentary hearing with House Commission XI on Monday.
Bank Indonesia is using a multi-pronged strategy involving foreign market interventions, government bond (or SBN) acquisitions, and capping US dollar purchases rather than relying on spot market intervention alone.
Perry maintains an optimistic outlook despite the continued weakening of the rupiah, according to a separate Jakarta Globe report.
He believes the rupiah will regain strength in the third quarter of 2026 to around 16,200 to 16,800 rupiah per US dollar and the average exchange rate will be around 16,500 rupiah.
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