Indonesia’s rupiah seen strengthening

JAKARTA, Indonesia’s central bank deputy governor Hartadi Sarwono said on Wednesday that he expected the rupiah currency to strengthen on the back of improving economic prospects.

‘Indonesia’s economic prospects still offer room for the rupiah to strengthen going forward,’ Sarwono told reporters.

‘The capital outflows as a result of porftfolio adjustment by foreign investors is still within normal levels.’

The rupiah earlier on Wednesday weakened 1 percent per dollar as investors took profits after its recent rally. The local currency, however, remained Asia’s best-performing currency this year, gaining almost 15 percent.

Sarwono said the recent strengthening of the dollar was likely to be temporary.

‘The (recent) strengthening of the dollar against emerging market currencies in the region does not mean that the era of a weakening dollar has come to an end. This is because of the huge U.S. budget deficit, low interest rates and slow economic recovery in the U.S.’ he said.

source: Reuters