Off the wire
• First fixed-wing aircraft for Antarctic research delivered to China  • Uganda's Mbabazi to coach Somalian national football teams  • Air force uses supersonic fighters to train pilots  • Dutch Minister and State Secretary quit following crime deal  • Uganda's FA renews contract of Serbian coach Sredojevic  • Hollande expresses "immense sadness" over nationals' death in Argentina  • Weather information for Asia-Pacific cities  • Roundup: Singapore stocks end down 0.19 pct  • China February auto sales drop 0.2 pct  • Botswana underlines protection of African elephants  
You are here: 　 Home

Indonesian central bank: Weakening rupiah risks small on inflation, good for current account

Xinhua, March 10, 2015 Adjust font size:

Indonesia's Central Bank plays down the risks of weakening rupiah against the U.S. dollar on inflation, saying it is favorable to the effort to narrow current account deficit gap, banker said here on Tuesday.

Deputy Governor of the bank Perry Warjiyo made the statement as the rupiah has weakened significantly against U.S. dollar in recent weeks and passed physiological level of 13,000 per one U.S. dollar.

The deputy disclosed that the decreasing of each 1 percent rupiah only triggers inflation to rise by 0.07 percent.

"So that the impact is not too significant to inflation," he said at the central bank headquarters.

The deputy governor said that the inflation will remain in check by year end and the bank is optimistic that the consumer prices index will be on the range of its target of 3 to 5 percent this year even it can be below 4 percent.

Indonesia's inflation eased to 6.3 percent in February on year from 6.95 percent in January due to the government's policy to cut oil prices in January, the national statistic bureau has said.

The bank cut its basic rate by 25 basis points to 7.5 percent in unscheduled meeting on Feb. 17.

The deputy governor said that the subdued rupiah could help reducing imports that help effort to narrow current account deficit gap.

Indonesia's current account deficit reached to 26.2 billion U.S. dollars or 2.95 percent of gross domestic product (GDP) last year, narrowing from 3.18 percent of the GDP in 2013, according to the central bank.

For this year, the bank has forecast the current account deficit to be 3 to 3.5 percent of the GDP, expanding from its estimate of 3 percent of the GDP in 2014.

However, it has been narrowed from the record of 4.4 percent of the GDP at the second quarter 2013, in part due to rising non-oil and gas exports and weakening global oil prices.

Indonesian President Joko Widodo, who took office on Oct. 20, expects the economy to expand by an average of more than 7 percent annually within his five year term, according to Economic Chief Minister Sofyan Djalil. Endi