JAKARTA: Bank Indonesia (BI) expects the effect of Britain’s exit (Brexit) from the European Union on global financial markets, including the impact on the rupiah, to be temporary.
Around midday on Friday, the Indonesian currency was down more than 1 percent against the US dollar, falling below the psychologically significant level of Rp 13,400.
“We perceive it as reasonable, because there is a flight to quality [of assets]. But in general, Indonesia’s economy is in a good shape, thus we view this as a temporary thing only,” BI governor Agus Martowardojo said in Jakarta on Friday.
He further said that the British pound had depreciated by around 10 percent, falling to the lowest level in 30 years, as the results of the referendum came through. The euro depreciated by around 2 percent.
“This is a risk-on period, where investors are heading to countries considered safe, and those are more than likely the US and Japan. Consequently, other countries are experiencing a weakening of their currencies,” Agus explained.
Earlier, Finance Minister Bambang Brodjonegoro said the impact of the pro-Brexit victory, which is set to be formally announced on Friday evening Jakarta time, to cause turmoil in stock markets. “The impact is felt not only in Indonesia but in the whole world, in the movement of currencies and shares,” he said.
