Jakarta (Antara Bali) - Bank Indonesia said its has continued to issue monetary policy by taking into account global economic trend especially after the U.S. presidential election.
"Bank Indonesia would continue to coordinate with he government and stakeholders to make sure that we would respond to all external developments," the Central Bank Governor Agus Martowardojo said here on Friday.
Agus said the global economy is still surrounded by uncertainties ahead of the possibility of the Fed to issue a new benchmark interest rate in December, 2016.
In addition, negative response of the market to the result of the U.S. presidential election has resulted in turbulence in the Asia markets and depreciation of rupiah that it is no longer in line with its fundamental value, he said.
The Central Bank, however, would continued to monitor the global economic developments and decided to maintain the (7-day Reverse Repo Rate at 4.75 percent, he said
The Central Bank also guarantees the market liquidity after the outflows of fund triggered by the possibility of the Fed to raise its fund rate and sell off by investors, normal ahead of year end.
"Global factor has big role toward the end of a year. But this is part of something normal and Bank Indonesia will be present to maintain stability in the market," Agus said.
Agus drew attention specially to developments in the United States, after the election of business tycoon Donald Trump as a new president of the world's second largest economy.
He pointed to Trump's political rhetoric during the pre election campaigns.
He said Indonesia could suffer significantly in exports if Trump would consistent with his pledge to adopt protectionism as the United States is market for 10-11 percent of the country's export commodities.
The protectionist policy could also affect trade relations between the United States and China, the world's largest economy.
The impact would be bad for developing economies in Asia including Indonesia, as China would have to find other markets for its exports.
In addition, uncertainty ahead of Trump's inauguration could affect the global financial system, which depends much on capital flows.
"Hopefully, there would be certainty in the policy of the president elect before the inauguration that we could prepare ourselves. Currently, we make certain that bank liquidity is adequate and banks could carry on with activities with credit expansion ," he said. (WDY)
