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Information about the rupiah as the currency of the Republic of Indonesia managed by Bank Indonesia pursuant to prevailing laws and regulations.
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The BI Board of Governors Meeting agreed on 19th
and 20th January 2022 to hold the BI 7-Day Reverse Repo Rate at
3.50%, while also maintaining the Deposit Facility (DF) rates at 2.75% and
Lending Facility (LF) rates at 4.25%. The decision is
consistent with the need to maintain inflation, exchange rate and financial
system stability for economic growth amid a build-up of external pressure.
the statement relayed at the Bank Indonesia Annual Meeting 2021 held on 24th
November 2021, Bank Indonesia will direct its policy mix in 2022 towards
maintaining stability by supporting national economic recovery efforts. In this case, monetary policy in 2022 will
focus on maintaining stability, while macroprudential policy, payment system policy,
money market deepening as well as an inclusive and green economy and finance
will be maintained to revive economic growth.
The direction of the BI policy mix in 2022 is as follows:
Monetary policy in 2022
will focus on maintaining stability, while mitigating the global impact of
policy normalisation in advanced economies, the US Federal Reserve in
Bank Indonesia will also
continue strengthening policy coordination with the Government and Financial
System Stability Committee to accelerate the vaccination rollout and reopen
economic sectors, facilitate fiscal and monetary coordination as well as revive
lending to the corporate sector and other priority sectors, while maintaining
macroeconomic and financial system stability and driving the national economic
The global economic
recovery is projected to persist despite the recent surge of Omicron cases,
intense inflationary pressures and faster normalisation of monetary policy by
several central banks. A more synchronous recovery is expected, not
only in the United States and China yet also in Europe, Japan and India. Ongoing economic improvements were recently
confirmed by several strong indicators released in December 2021, including the
Purchasing Managers Index (PMI), consumer confidence and retail sales. Bank Indonesia projects global economic
growth, therefore, at 4.4% in 2022.
World trade volume and international commodity prices continue to rise,
thus propping up the export outlook in developing economies. Global financial market uncertainty persists
in response to the Fed’s recent announcement to accelerate policy normalisation
given the build-up of inflationary pressures in the United States caused by
supply chain disruptions and growing demand, coupled with rapid transmission of
the Omicron variant of Covid-19. Such
conditions have impeded capital flows and intensified currency pressures in
developing economies, including Indonesia.
Domestic economic growth is
forecast to accelerate in 2022. The latest economic indicators released in
December 2021 point to a faster recovery process, including public mobility,
retail sales and consumer confidence indicators. Overall, the national economy is projected to
grow in the 3.2-4.0% range in 2021, before accelerating to 4.7-5.5% in 2022 on
the back of stronger private consumption and investment as the Government
maintains an expansive fiscal posture and export performance remains solid,
despite the ever-present risk of increasing Covid-19 cases that continues to
demand vigilance. The growth projections
are supported by increasing public mobility given the faster vaccination
program rollout, broader reopening of economic sectors and ongoing policy
stimuli. The major economic sectors,
namely the manufacturing industry, trade, construction and agriculture,
continue to gain momentum. Spatially,
economic improvements are expected in all regions of the archipelago,
particularly Java, Sumatra, Kalimantan and Balinusra, in line with persistently
solid exports, growing domestic demand and the major economic sectors in each
Indonesia’s Balance of
Payments (BOP) is projected to remain solid. The BOP surplus in 2021 is expected to
surpass the previous year, supported by a current account surplus of
approximately 0.2% of GDP and a larger capital and financial account
surplus. Entering 2022, foreign capital
inflows to domestic financial markets have been maintained, as reflected by a
modest net inflow of portfolio investment totalling USD0.2 billion as of 18th
January 2022. Furthermore, the position
of reserve assets at the end of December 2021 was high at USD144.9 billion,
equivalent to 8.0 months of imports or 7.8 months of imports and servicing
government external debt, which is well above the 3-month international
adequacy standard. Looking ahead, robust
BOP performance in 2022 is expected, bolstered by a low and manageable current
account deficit in the 1.1-1.9% of GDP range.
In addition, the capital and financial account is forecast to record a
larger surplus in 2022 than in the previous year, primarily due to foreign
capital flows in the form of foreign direct investment (FDI) given the recent
improvements to the domestic investment climate.
As a corollary of Bank
Indonesia's stabilisation measures and external sector resilience, rupiah
exchange rate movements remain under control despite persistent global
financial market uncertainty. As of 19th
January 2022, the value of the rupiah depreciated by 0.77% (ptp) and 0.01% on
average compared with the December 2021 level.
The weaker rupiah stems from muted foreign capital inflows despite a
maintained domestic supply of foreign exchange and the positive perception of
investors concerning the promising domestic economic outlook. Rupiah depreciation is relatively lower,
however, than the lost value experienced in several other emerging economies,
namely the Philippines (0.98% ytd) and Russia (2.89% ytd). Looking ahead, the Rupiah exchange rate is expected to be maintained in line with solid economic fundamentals despite continued global financial market uncertainty. Furthermore, Bank Indonesia continues to
strengthen rupiah exchange rate stabilisation policy in line with the
currency's fundamental value and market mechanisms through effective monetary
operations and adequate market liquidity.
Inflation in 2021 was low
and contributed to economic stability. In 2021, the Consumer Price Index (CPI) was
recorded at 1.87% (yoy), which is below the 3.0%±1% target despite increasing
from 1.68% (yoy) in 2020. Inflation in
2021 was influenced by weak domestic demand compressed by the Covid-19
pandemic, stable exchange rates, anchored inflation expectations, adequate supply
and orderly distribution of foodstuffs as well as policy synergy between Bank
Indonesia and the Government to maintain price stability. Looking ahead, Bank Indonesia
projects-controlled inflation in 2022 within the 3.0%±1% target corridor in
line with sufficient aggregate supply to meet growing aggregate demand,
anchored inflation expectations and exchange rate stability, coupled with the
optimal policy response instituted by Bank Indonesia and the Government. Bank Indonesia remains firmly committed to
maintaining price stability and strengthening policy coordination with the
central and regional governments through national and regional inflation
control teams (TPI and TPID) to control headline inflation within the target.
Liquidity conditions are
still loose in line with Bank Indonesia’s accommodative monetary policy stance
and the impact of synergy between Bank Indonesia and the Government to support
the national economic recovery. Bank Indonesia has injected liquidity through
quantitative easing (QE) to the banking industry totalling Rp147.83 trillion in
2021 and Rp5.93 trillion in 2022 (as of 18th January 2022). Bank Indonesia in 2021 purchased SBN to fund
the State Revenue and Expenditure Budget (APBN) totalling Rp358.32 trillion,
consisting of: (i) Rp143.32 trillion through the primary market in accordance
with the Joint Decree (KB) issued by the Minister of Finance and Governor of
Bank Indonesia, which remains effective until 31st December 2022,
and (ii) private placement totalling Rp215 trillion to fund the health and
humanitarian budgets for Covid-19 pandemic handling in accordance with the
Joint Decree (KB) issued by the Minister of Finance and Governor of Bank
Indonesia on 23rd August 2021.
In 2022 (as of 18th January 2022), Bank Indonesia has
purchased SBN in the primary market totalling Rp2.20 trillion. The expansive monetary policy stance
supported loose liquidity conditions in the banking industry in December 2021,
as reflected by high ratio of liquid assets to deposits at 35.12% and deposit
growth of 12.21% (yoy). Liquidity in the
economy has also increased, as indicated by narrow (M1) and broad (M2) money
supply aggregates, which grew 17.9% (yoy) and 13.9% (yoy) in the reporting
period. Bank Indonesia will normalise
liquidity policy in 2022, while safeguarding the banking industry’s ability to
extend financing to the corporate sector and buy SBN to fund the State Revenue
and Expenditure Budget (APBN).
A consistently low policy
rate and loose liquidity conditions in the banking industry have continued to
edge down lending rates. In the markets, the overnight interbank rate
and 1-month deposit rate have fallen 25bps and 131bps since December 2020 to
2.78% and 2.96% in December 2021. In the
credit market, the banking industry continues to lower prime lending rates
(PLR), accompanied by lower interest rates on new loans across all bank
groups. Increasing economic activity and
greater public mobility have improved risk perception in the banking industry,
prompting lower interest rates on new loans.
Notwithstanding, significantly smaller reductions in lending rates
compared to deposit rates have increased interest rate spread and net interest
margin (NIM) in the banking industry.
Consequently, Bank Indonesia acknowledges that the banks’ role in
lending/financing could be improve, including by lowering lending rates, to hasten the
national economic recovery.
Financial system resilience
is solid, accompanied by a gradual revival of the bank intermediation function.
The Capital Adequacy Ratio (CAR) in the banking industry remained high in
November 2021 at 25.59%, with persistently low NPL ratios of 3.19% (gross) and
0.98% (nett). The bank intermediation
function continues to gain momentum, with 5.24% (yoy) credit growth recorded in
December 2021 across all loan types, including working capital loans, consumer
loans and investment loans at 6.32% (yoy), 4.67% (yoy) and 4.01% (yoy)
respectively. Demand for credit on the
corporate side showed signs of growth, while on the supply side, the banking
industry lowered lending standards, particularly to priority sectors, in line
with lower credit risk perception. MSME
loans enjoyed significant growth on higher demand in line with recovering
business activity and government program support. Meanwhile, Bank Indonesia continues to hold
the accommodative macroprudential policy stance, while expanding
macroprudential policy to priority sectors and MSMEs. Bank Indonesia projects credit growth in
2022, therefore, in the 6-8% range and deposit growth at 7-9%.
Bank Indonesia will
continue expanding payment system digitalisation and accelerating
implementation of an inclusive digital economy and finance ecosystem to spur
economic growth. In 2021, Digital economic and financial
transactions proliferated with rapidity given greater public acceptance and
growing public preference towards online retail as well as the expansion of
digital payments and digital banking.
The value of e-money transactions increased 49.06% (yoy) to Rp305.4
trillion in 2021, which is projected to expand another 17.13% (yoy) in 2022 to
reach Rp357.7 trillion. The value of
digital banking transactions increased 45.64% (yoy) to Rp39,841.4 trillion in
2021, which is projected to expand another 24.83% (yoy) in 2022 to reach
Rp49,733.8 trillion. In terms of cash,
currency in circulation grew 6.78% (yoy) in December 2021 to Rp959.8
trillion. In 2022, Bank Indonesia will
continue to foster payment system innovation, maintain a seamless and reliable
payment system as well as strengthen coordination between government ministries/agencies
to ensure adequate availability of rupiah currency fit for circulation
throughout the territory of the Republic of Indonesia.
Jakarta, 20th January 2022Head of Communication DepartmentErwin HaryonoExecutive DirectorInformation about Bank IndonesiaTel. 021-131, Email:
Contact Center BICARA : (62 21) 131 E-mail : email@example.com
Working hours: Monday to Friday, 08.00-16.00 West Indonesia Time
Current Account Surplus Continues, External Resilience Maintained
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