(March 4): Indonesia’s central bank intervened to protect the rupiah as emerging markets came under pressure following the Iran war.
“Bank Indonesia will continue to be present in the market to maintain exchange rate stability and prevent the impact of the escalating Middle East conflict,” senior deputy governor Destry Damayanti said in a statement Wednesday (March 3).
The central bank will continue to implement “firm and consistent interventions” in offshore non-deliverable forwards as well as in onshore non-deliverable forwards, spot and bond markets, she said.
The Iran war is curbing appetite for risky assets, prompting central banks in India and Turkey to also intervene to defend their currencies on Monday. Rising oil prices are boosting concern over inflation and the trade deficit for Indonesia, as it imports about half of its oil requirements.
The rupiah slid 0.4% to 16,919 per dollar on Wednesday, inching closer to its weakest level on record.
Damayanti said the rupiah’s depreciation remained aligned with the region while foreign exchange reserves were stable at US$154.6 billion at the end of January.
See also: Robust Asian reserve pile positioned to defend currency slide
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