Bank Indonesia: Rupiah Not Affected by North Korea Turmoil

Martowardojo stated that he sees no negative impact on the rupiah. In fact, based on Bank Indonesia data, capital inflows into Indonesia reached IDR 130 trillion (approx. USD $9.8 billion) up to 1 September 2017. Although this figure is smaller compared to the IDR 150 trillion worth of capital inflows in Indonesia during the same period in 2016, it remains an impressive figure considering there are plenty of uncertainties within global markets.

So far this year, the rupiah has been stable against the US dollar. In fact, the Indonesian rupiah has strengthened 1.0 percent to IDR 13,333 per US dollar since the start of 2017 (Bloomberg Dollar Index). Martowardojo said he sees no reason for a different outlook in the remainder of the year.

Domestically, the economic context is stable. Although H1-2017 gross domestic product (GDP) growth was a bit disappointing at 5.01 percent (y/y), inflation has eased to 3.82 percent (y/y) in August (which constitutes a low inflation figure for Indonesian standards), while the current account deficit remains under control. Bank Indonesia targets to push inflation lower as this would improve people's purchasing power.

Indonesia's bleak GDP growth in H1-2017 was attributed to modest domestic consumption. However, Bank Indonesia expects to see an improvement in domestic consumption in the second half of the year.

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.01 percent to IDR 13,337 per US dollar on Wednesday (06/09).

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia

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