Bank Indonesia Governor Agus Martowardojo has said that the central bank has prepared a second line of defense for the rupiah, with pressure against the currency expected to continue.
Indonesia would cooperate with other countries through bilateral swap agreements and bilateral currency swap agreements (CSAs), Agus told journalists at a press conference in Jakarta on Thursday evening as reported by kontan.co.id
He said such cooperation existed in the Chiang Mai Initiative Multilateralization (CMIM), which is a multilateral currency swap arrangement between ASEAN+3 members. It came into effect on March 24, 2010.
The three non-ASEAN countries are China, Japan and South Korea.
“This is a form of defense that we will implement to ensure that we can handle the world economy, which is heating up due to the increase of the US Treasury yield, trade disputes and geopolitical risks,” Agus said after speaking at the press conference.
He said such global economic dynamics would continue due to improvement in the United States economy from the consumption and investment sides as well as the assumption that the Federal Reserve would increase its reference rate more than three times.
Pressure against the rupiah also came from an increase in the global oil price and the threat of a trade war between the US and China, he said.
“There is uncertainty over the state of the global economy, but Indonesia is doing better economically, so we see this state as temporary,” he said. In March, BI’s foreign exchange reserve reached US$126 billion. (bbn)