IDR: Currency
Measures Impact Limited In Near Term
The BI has introduced
various regulations recently, including rules on the use of the IDR for onshore
transactions, to ensure market liquidity and efficiency.
In the medium- to
longer-terms, these regulations would work to benefit the Indonesian economy
and stabilize the economy and prevent its dollarization. These measures should
not only help to alleviate the demand for dollar but at the same time, ensure
sufficient dollar liquidity to stem spikes in dollar demand.
However, in the near term,
these measures might not have the intended impact as the daily transactions do
not look significant. As well, weak domestic macroeconomic fundamentals and the
possibility of portfolio outflows resulting from widening real yields should
keep the IDR elevated in the quarters ahead.
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