Indonesian central bank eyes fourth-quarter rate cut if rupiah stabilizes

JAKARTA (Reuters) – Indonesia’s central bank governor said on Monday there could be room to cut interest rates in the fourth quarter as the rupiah is expected to be more stable, but he will focus on maintaining currency stability for now.

The rupee hit a four-year low of 16,475 per U.S. dollar last month on a strong dollar and concerns over the new government’s spending plans.

The rupiah is stabilizing after periods of weakness in recent weeks and is expected to trend stronger later this year due to an expected rate cut by the U.S. Federal Reserve, Bank Indonesia (BI) Governor Perry Warjiyo said.

The BI expects the rupee to trade on average between 15,700 and 16,100 rupees per dollar this year, he told parliament. It was trading at 16,250 rupees per dollar at 0821 GMT.

“We will see if there is room to ease monetary policy in the fourth quarter,” he said. “For now, our priority is to maintain monetary stability.”

(Reporting by Stefanno Sulaiman, with contributions by Stanley Widianto, writing by Fransiska Nangoy, editing by John Mair)