Sumber: Istimewa
BANK Indonesia (BI) views the rupiah exchange rate as being undervalued compared to Indonesia’s economic fundamentals. This was the statement of BI Governor, Perry Warjiyo, during the press conference following the Board of Governors Meeting (RDG) at the end of last month. Who believes the rupiah is undervalued?
The rupiah is currently hovering at around Rp16,880 per US dollar (US$1) – weakening 0.56% in just a matter of weeks. What does “undervalued” mean in BI’s dictionary? The rupiah is said to be “on sale” – at a massive discount – because fundamentally it should be stronger. Inflation is low, yields are attractive, and economic growth is improving. So why has the rupiah “plunged”? According to the BI Governor, all of this is due to “global uncertainty,” which has raised the risk premium – a convenient scapegoat that can never defend itself.
