Bank Indonesia Likely Buys Total $100 Mln To Slow Slide Vs Rupiah

Bank Indonesia likely bought around $100 million in total Friday to slow the greenback's slide against the rupiah, three dealers said.

They suspected that Bank Indonesia was in the market via state banks, buying the dollar between IDR8,870 and IDR8,850 as it fell to lows not seen since June 2007.

“I suspected that Bank Indonesia bought the dollar only to smoothen its slide, not to support it at certain level as it needs a stronger local currency to curb imported inflation,“ one of the dealers said.

Bank Indonesia indicated earlier this month that it would allow the rupiah to appreciate to help curb price increases as inflation has been stubbornly hovering above its year-end inflation target of between 4% and 6%. In January, the consumer price index rose 7.02% from a year earlier.

The central bank seldom comments on particular interventions in the currency market, but it has mentioned in the past that it would intervene to reduce volatility.

The dollar was traded at IDR8,850 at 0435 GMT, down from IDR8,880 late Thursday.