National economic dynamics are solid: BI

05 , 2018 | Source: Antara News

Bank Indonesia is satisfied that national economic dynamics are currently solid and resilient.

"Several economic indicators have confirmed domestic economic resilience, including robust economic growth coupled with low and controlled inflation," Governor of Bank Indonesia Perry Warjiyo said in a statement here on Tuesday.

Warjiyo reaffirmed Bank Indonesia`s avowed commitment to safeguard rupiah exchange rate stability.

To that end, Bank Indonesia has instituted a range of stabilisation measures. First, by increasing the volume of foreign exchange market intervention. Second, by purchasing tradable government securities in the secondary market.

Third, by stepping up FX Swap auctions, with auction targeting USD400 million. Fourth, by continuously opening swap hedging windows.

In addition, Bank Indonesia is constantly improving policy coordination with the Government, including the Financial Services Authority (OJK), to ensure that exchange rate stability and financial system stability are maintained.

Based on price monitoring as of the final week in August 2018, CPI inflation is forecasted at -0.06 percent (mtm) or 2.12 percent (ytd) and 3.19 percent (yoy).

Furthermore, the bank intermediation function is improving, thus substantiating financial system stability.

Nevertheless, Bank Indonesia will continue to remain vigilant of several risks that could potentially emerge against a backdrop of increasing global uncertainty, including the recent developments in Turkey and Argentina.

With the backing of monetary policy, financial system stability and prudent fiscal policy, together with government commitment to reduce the current account deficit, Bank Indonesia is confident in national economic resilience.

Accordingly, Bank Indonesia projects the current account deficit at 2.5 percent of GDP in 2018 and 2 percent of GDP in 2019, bolstered by various Government policies, including B20 policy which is expected to reduce the deficit to USD2.2 billion, an expansive tourism industry, postponement of several government projects and a growth-surge of exports to around USD9-10 billion next year.

 

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