The Indonesian rupiah exchange rate appreciated slightly on Wednesday (11/06). According to the Bloomberg Dollar Index, the currency of Southeast Asia’s largest economy appreciated 0.04 percent to IDR 11,810 per US dollar. Reuters reported that the euro zone's monetary easing in combination with the recent improvement in China's economy offset the impact of higher US yields on Asia. However, investors are still waiting for several data, including the BI interest rate, the Eurozone’s industrial production, and US retail sales.
On Thursday (12 June 2014), the central bank of Indonesia will hold its next Board of Governor’s Meeting in which it will be decided whether to change the country’s interest rate policy. The country’s benchmark interest rate (BI rate) is currently set at 7.50 percent and this figure is expected to be maintained.
Indonesian Finance Minister Chatib Basri said that Bank Indonesia's policy to keep the BI rate at 7.50 percent is good because in future Indonesia will face an increase in the Fed rate (probably in the second half of 2015). Bank Indonesia Senior Deputy Governor Mirza Adityaswara stated that the central bank is comfortable with the rupiah exchange rate between IDR 11,300 and IDR 11,800 per US dollar in 2014.
Indonesia's Finance Ministry sold IDR 12 trillion (USD $1.02 billion) worth of bonds at an auction on Tuesday (10/06), higher than an indicative target of IDR 8 trillion, with higher weighted average yields compared with the previous auction on 26 May 2014. Total incoming bids were IDR 21.6 trillion and the highest bid-to-cover ratio was 5.36 for the three-month T-bills.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.03 percent to IDR 11,803 against the US dollar on Wednesday (11/06).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia