Thursday, 24 Jan 2019

IDX asks BI to raise its benchmark interest rate, these are the reasons


Tito SulistioTito Sulistio - The declining value of the rupiah in this week against the value of the United States dollar (US) to create an uneasy business actors. The government is asked to move quickly to overcome the weakness of rupiah.

The rupiah exchange rate has reached IDR 14,000, the President Director of Indonesia Stock Exchange (IDX), Tito Sulistio suggested to Bank Indonesia (BI) to immediately raise its reference rate 7 Days Reverse Repo Rate.

At the Jakarta Stock Exchange on Wednesday, May 9th 2018, Tito said, "One way to raise the rupiah demand is to increase interest rates, some banks have raised their interest rates"

"There are two main things still uncertainty in the world trading and uncertainty in Indonesia.The biggest question is how do we pull back to raise the demand for rupiah" continued Tito. "If the rupiah stabilizes, it can push the JCI rate which is currently in a weakening trend" he added

Although IHSG is often corrected, Tito asserted, the domestic capital market is still quite good. In fact, he said, capital funds in the Indonesian capital market is greater than the Thai capital market.

"So the Indonesian capital market is still supported by companies with good results, good portfolio and strong liquidity" he said.

Previously, Bank Indonesia (BI) is considering raising the benchmark rate or 7-day Reverse Repo Rate. This effort as one of the efforts to control the rupiah exchange rate continued to weaken up to IDR 14.000/USD.

BI Senior Deputy Governor, Mizra Adityaswara said the matter will be discussed at the Board of Governors Meeting (RDG) in the middle of this month.

Mirza said, in deciding the rate hike, BI will see the existing data, ranging from inflation to the movement of global capital flows. The policy of the US central bank will also be taken into consideration.

In addition, BI will also see how the movement of interest rates in other countries. Mirza acknowledged, at this time a number of countries have raised interest rates in response to the policy of the US central bank.


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