The central bank (Bank Indonesia/B.I.) reported that supported by Bank Indonesia’s stabilisation measures and maintained foreign capital inflows to domestic financial markets, rupiah exchange rates have been maintained. As of 16th December 2020, the rupiah strengthened by 0.63% on average despite depreciating by 0.04% (ptp) on the November 2020 level.
A surge of foreign capital inflows to domestic financial markets in line with lower global financial market uncertainty and the positive perception of investors towards the promising domestic economic outlook have fed through to a stronger rupiah. Therefore, the rupiah recorded 1.72% (ytd) depreciation as of 16th December 2020 compared with the level at the end of 2019.
Looking ahead, B.I. still expects the rupiah to regain lost value as the currency is fundamentally undervalued, supported by a narrow current account deficit, low and stable inflation, attractive domestic financial assets for investment, a lower risk premium in Indonesia as well as abundant global liquidity.