Bank Indonesia ready to stabilize the rupiah as Trump leads - BNN Bloomberg

(Bloomberg) — Bank Indonesia said it is ready to take action to save the rupiah from excessive volatility as Donald Trump’s early lead in the U.S. presidential race boosts the dollar’s strength.

“BI will always monitor the exchange rate movements of the rupiah and other currencies and will certainly make various attempts to stabilize the exchange rate if there is an excessive increase in volatility,” said Fitra Jusdiman, director of monetary and securities management. in a cellphone message Wednesday.

The central bank will deploy its so-called triple intervention, targeting the foreign exchange market, domestic non-deliverable futures markets and secondary government bond markets, he added.

The rupiah fell 0.6% to 15,828 against the US dollar in trading on Wednesday morning, its weakest level in almost three months. Jusdiman said the depreciation is “relatively in line” with forecasts and the movement of most Asian currencies with Trump leading the vote count.

“BI has anticipated various scenarios of the US presidential election results and has also prepared mitigation measures for its possible consequences,” he said.

It underlines how the US election – and the currency volatility it causes – could complicate the monetary easing path for emerging markets. The rupiah has fallen 4.4% this quarter on concerns that a Trump presidency could usher in higher tariffs that could dampen global growth.

Citigroup Inc. and Barclays Plc are among those who see a greater chance that Bank Indonesia could again suspend its easing campaign at the Nov 20 meeting. This is despite steadily declining inflation, a struggling manufacturing sector and economic growth at a one-year low.

“BI has said in the past two meetings that growth must be ‘supported’, but interest rate policy still depends largely on the balance of payments outlook – which is currently driven more by global market developments, especially pending the outcome of the US elections. Citi economist Helmi Arman wrote this in a note on Tuesday. He expects the next rate cut of 25 basis points to take place in December.

While BI has offered incentives in the meantime to boost bank lending to labor-intensive sectors, PT Bank Maybank Indonesia said a rate pause may not last too long if policymakers are concerned about growth.

“A significantly lower BI rate will support domestic demand activities that have substantial impacts on the economy,” the report said.

(Updates with Bank Indonesia interest rate outlook, analyst commentary.)