Bank Indonesia hold the benchmark interest rate at 7.5% level

Bank Indonesia hold the benchmark interest rate at 7.5% level

Bank Indonesia kept its benchmark interest rate at the level of 7.5% to keep inflation levels the range of 3.5% to 5.5% and lower the trade deficit.

In a press release, Director of Communications Bank of Tirta Segara said "economic adjustment process went quite well" despite the range of dollars are now quite depressed Rp11.800 per dollar.

As is known in April of this year Indonesia's trade balance deficit of 1.96 billion U.S. dollars, are due to a decrease in non-oil exports based on natural resources.

Economists from the University of Atma Jaya Jakarta, Prasetyantoko, said there is not a sufficient reason to change the current benchmark interest rate.

"Market expectations'm riding, but real entrepreneurs'm down. While not likely go down and there is no sufficient reason also to be raised now," he said.

Executive Director of the Economic and Monetary Policy Agung Yudha said fixed reference rate is made because they "saw no risk of global and domestic."

"As is known, the current account deficit is a major problem," he said as quoted by Reuters.

The positive impact of the presidential election
After this decision, the rupiah edged looks Rp11.790 per dollar, but this level was still higher than in mid-May that briefly touch on level Rp11.400.

Chief Economist of Bank Central Asia, David Sumual, said weakening the rupiah is still quite reasonable and are in the new equilibrium point.

This year, David said, Indonesia is actually quite benefited with the euphoria of investors ahead of a presidential election that turned out to have a positive impact on the capital markets and the exchange rate.

"Economic fundamentals no significant change. Ahead of the presidential election, but there is hope that investors will be better expectations and are elected also good economic program.

"So many investors who get in first.'s Obviously affect the exchange rate and the stock market. Exchange rate would not be as strong as we are now if there is no entry that has a portfolio of more than U.S. $ 11 billion."

Although some media reported that JK Jokowi quite favored by market players, some analysts say market participants actually not in a position to support a particular candidate.

Prasetyantoko said whoever was elected president later, investors will continue to look at the implementation of economic policy in order to make a decision to leave or survive. BBC