JAKARTA Pressure on Indonesia's Rupiah is expected to be temporary, a senior Bank Indonesia BI official said on Thursday, adding that the currency is expected to strengthen to reflect its fundamental value later in the year.
Edi Susianto, head of the central bank's monetary management department, told Reuters in an interview that BI would prioritize policies that support the market mechanism and he sees no need for capital controls.
The rupiah hit its lowest level since April 2020 on Wednesday, as many currencies in the world came under pressure due to a continuing rally in the U.S. dollar.
Edi believes that the exchange rate will return to a stronger level, reflecting Indonesia's strong economic prospects later in the year. He didn't share BI's estimate of the rupiah's fundamental level.
He said that we have a belief that the rupiah will achieve the fundamental value once the market's volatility and sentiment will be lessened.
He predicted that there would be a lot of volatility in the foreign exchange market in coming weeks as markets speculated on how much more the Federal Reserve would have to raise interest rates to tame the U.S. inflation rate.