Indonesia’s rupiah has tumbled to 17-year lows, but the central bank is prepared to draw the line on just how much further it can fall.
“If Indonesia’s inflation this year is 4-4.5 percent, and then U.S. inflation is at 1.5 percent, meaning depreciation is around 3-3.5 percent, it is tolerable for Indonesia,”Mirza Adityaswara, senior deputy governor of Bank Indonesia – the country’s central bank – said Monday at the Credit Suisse Asian Investment Conference.
“Depreciation above that level, we think is not tolerable, but if that’s only temporary because of the current market jittery because of the [Federal Open Market Committee] meeting, in April and June, that’s still acceptable for us,” he added. “But beyond that level we think is not acceptable.”
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