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BI Board of Governor's Meeting, September 2018

Author

Listed:
  • Febrio Kacaribu

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Alvin Ulido Lumbanraja

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Syahda Sabrina

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

Abstract

Late August to early September saw rapid USD/IDR depreciation to almost 15,000 level, although the pressure on Rupiah has somewhat receded for now. This sharp Rupiah depreciation and deterioration in market sentiment is caused by external pressures. The contagion effect from currency crisis in Turkey and Argentina and recession in South Africa caused global investors to exit emerging markets and move their money to safe haven assets. Moreover, escalation of trade war between United States and China put additional pressures on Rupiah. We see that Bank Indonesia’s credibility in its stabilization pledge is sufficient enough to avoid risks of currency crisis like Argentina, Turkey, or South Africa. Nevertheless, as external pressures and persistent current account deficit remain, BI should continue to anticipate potential market volatility by increasing its policy rates in the coming meeting.

Suggested Citation

  • Febrio Kacaribu & Alvin Ulido Lumbanraja & Syahda Sabrina, 2018. "BI Board of Governor's Meeting, September 2018," LPEM FEBUI BI Board of Governor Meeting Brief 201809, LPEM, Faculty of Economics and Business, University of Indonesia, revised Sep 2018.
    • Handle: RePEc:lpe:gomeet:201809
    as

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    File URL: https://www.lpem.org/repec/lpe/queouts/BBG201809.pdf
    File Function: First version, 2018
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