Despite uncertainty in the financial market and surging global oil prices, which have been worsened by El Nino-induced food supply disruptions, Warjiyo anticipates steady economic growth driven by domestic consumption. Asian central banks continue to tread carefully regarding rate alterations in the face of looming inflation threats.
Bank Indonesia is persistently intervening in the foreign exchange (FX) market and selling rupiah securities to manage volatility. The possible rate hike by the Federal Reserve in November could trigger further selloffs from yield-seeking investors.
The central bank, with its foreign exchange reserves at a 10-month low and dwindling interest in rupiah notes, predicts ongoing capital outflow pressures in Q4. This could affect dollar inflow into Southeast Asia’s largest economy.
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