Indonesia central bank says rupiah decline has overshot, currency undervalued

[JAKARTA] Indonesian central bank governor Agus Martowardojo said on Wednesday the recent decline in the rupiah against the US dollar has overshot and the currency is now undervalued.

The rupiah weakened as much as 1.89 per cent to its lowest since July 1998 as the devaluation in the Chinese yuan hit emerging market currencies.

"Bank Indonesia will optimise policy mix and will continue to coordinate with the government and other authorities," Mr Martowardojo said in a statement.

He reiterated a Bank Indonesia official's earlier statement that the authorities will maintain their presence in the foreign exchange market to stabilise the rupiah.

REUTERS