Abdurrahman says political factors behind rupiah's fall<\/p>\n
JAKARTA (JP): President Abdurrahman Wahid told the
\nInternational Monetary Fund (IMF) on Monday that the rupiah's
\nplunge in value was caused by a perception of political
\ninstability.<\/p>\n
\"The IMF delegation (expressed) concern over weak market
\nsentiment which has recently been demonstrated by the fall of the
\nrupiah's value,\" presidential spokesman Wimar Witoelar told
\njournalists.<\/p>\n
\"The president conveyed his concern that this is due to a
\nperception which suggested that political and security stability
\nhas not yet been achieved.\"<\/p>\n
Wimar was speaking after a meeting at the presidential palace
\nbetween Abdurrahman and visiting IMF Asia-Pacific director Yusuke
\nHoriguchi.<\/p>\n
Wimar said the President told Horiguchi: \"Various pressure
\n(groups) calling for his resignation could also be perceived as
\npolitical instability.\"<\/p>\n
Several economists and politicians have in the past week said
\nAbdurrahman should resign after he and his government failed to
\nimprove the country's economy after one year in office.<\/p>\n
Violent rioting and unrest have also continued to plague
\nseveral parts of the country.<\/p>\n
The rupiah ended lower at Rp 9,400 per U.S. dollar late on
\nMonday compared to around Rp 9,115 late on Friday. The level is
\nthe lowest since July and is down some 33 percent from the level
\nearly this year.<\/p>\n
Dealers said that in addition to politics, the rupiah was also
\naffected by the weakening of other currencies in the region
\nparticularly the Philippine peso and Thai baht.<\/p>\n
But dealers said that dollar selling believed to be made by
\nstate banks has helped prevent a further plunge in the rupiah.<\/p>\n
Following a separate meeting with Vice President Megawati
\nSoekarnoputri on Monday, Horiguchi spelled out the dangers faced
\nby the government if it failed to lift the market.<\/p>\n
\"If market sentiment does not strengthen, your investment will
\nbe weakening, the growth will be weakening and the people of your
\ncountry will be suffering,\" he told journalists.<\/p>\n
Wimar added the IMF's representative also relayed to
\nAbdurrahman the body's concern on other issues, including slow
\nasset sales by the Indonesian Bank Restructuring Agency (IBRA)
\nand the restructuring of debt owed by large debtors.<\/p>\n
\"Both sides agree that asset sales must be accelerated and
\ncarried out transparently,\" he said.<\/p>\n
The IMF is providing a multi billion dollar cash bailout to
\nhelp finance the country's economic reform program.<\/p>\n
The IMF said earlier on Saturday that accelerating the sale of
\nIBRA assets as well as continuing the other Fund-sponsored
\neconomic programs were crucial to help revive confidence in the
\neconomy.<\/p>\n
Separately, finance minister Prijadi Praptosuhardjo told
\nparliament on Monday that another factor causing the rupiah to
\nfall was reports that the government was planning to ask
\ninternational creditors for a debt moratorium.<\/p>\n
\"There's a misperception in the market now,\" Prijadi told
\nHouse of Representatives commission IX on state budget and
\nbanking during a meeting.<\/p>\n
He said that the government was planning a normal rescheduling
\nmechanism for its sovereign debt, not a debt moratorium.<\/p>\n
\"The market in Singapore has panicked because of this term
\ndebt moratorium,\" he said, pointing out that a debt moratorium
\nwould mean that the government could no longer finance its
\ndevelopment activities.<\/p>\n
Prijadi also said that the government had asked Bank Indonesia
\nto intervene to help strengthen the rupiah when the currency fell
\nto below the Rp 9,000 level last week.<\/p>\n
\"But we can't force Bank Indonesia,\" he said, pointing out
\nthat Bank Indonesia was an independent central bank.<\/p>\n
He added that the government had also appealed to domestic
\nbanks to sell their dollars to help lift the local currency.<\/p>\n
Meanwhile, Bank Indonesia senior deputy governor Anwar
\nNasution said that the central bank would intervene to help
\nstrengthen the rupiah if it was necessary.<\/p>\n
Anwar said that central bank could intervene by raising
\ninterest rates or directing the sale of dollars.<\/p>\n
The benchmark interest rate of Bank Indonesia one-month SBI
\npromissory notes is currently hovering at 13.74 percent. The
\ninterest rate is decided via a weekly auction of the SBI notes on
\nevery Wednesday. (byg\/rei)<\/p>",
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