Indonesia parliament commission drops request to audit central bank

[JAKARTA] Indonesia's parliament has dropped a request for an investigative audit of the central bank, a lawmaker said, after several closed-door hearings with Bank Indonesia's (BI) governor.

Some lawmakers from Commission XI, a parliamentary commission overseeing financial matters, called for the audit in January after the central bank lost more than US$15 billion in nine months defending the rupiah currency.

Yet, the rupiah still weakened by more than 10 per cent for all of 2015, making it the second worst perfoming currency in Asia last year after Malaysia's ringgit.

"BI's explanations in those meetings were quite clear so there are no more actions we will take. In this case, no investigative audit," commission member Johnny Plate told Reuters on Thursday.

The rupiah appreciated in December after the Federal Reserves raised US interest rates and eliminated some global uncertainties.

The currency has continued to strengthen in 2016, gaining more than 2 per cent against the dollar, despite two interest rate cuts by the central bank.

BI also managed to prop up reserves. Indonesia's foreign exchange reserves at end-January was about US$2 billion higher than its latest low in November.

Plate said improving financial conditions were also a factor in the commission's decision to not pursue the audit request. "The current situation is different. BI can work normally now," he said.

However, BI is still under political pressure from the government to cut interest rates further.

On Tuesday, coordinating minister for the economy Darmin Nasution said BI should consider lowering its policy rate to 4-5 per cent, renewing pressures for BI to do more to aid economic growth.

REUTERS