BI expects rupiah to gain strength soon<\/p>\n
JAKARTA (JP): Bank Indonesia deputy governor Miranda Gultom
\nexpressed confidence the rupiah would gain strength against the
\nU.S. dollar in light of the improving domestic political
\nsituation.<\/p>\n
Miranda said on Saturday the \"reconciliation\" between
\nPresident Abdurrahman Wahid and People's Consultative Assembly
\nSpeaker Amien Rais should provide a positive sentiment to the
\ncurrency market.<\/p>\n
Speaking to the media during a break in the Indonesian
\nEconomists Association congress in Makassar, South Sulawesi,
\nMiranda also said the confusion created last week by the
\ndowngrading of the country's long-term foreign currency issuer
\ncredit rating to selective default by Standard & Poor's had
\npassed.<\/p>\n
Asked if the central bank would intervene in the market by
\nselling dollars to prop up the rupiah, she said: \"We will wait
\nfor the right time.\"<\/p>\n
Miranda was quoted by Antara news agency as saying the central
\nbank would not sell its dollars if the market was still volatile
\ndue to massive speculation.<\/p>\n
She said the central bank must act carefully because it did
\nnot want the market to think Bank Indonesia was panicking.<\/p>\n
\"We must be able to read the signals of the market and respond
\naccordingly,\" she said.<\/p>\n
The rupiah dropped to a six-month low against the U.S. dollar
\non Thursday, hitting 8,005 to the greenback. Traders said the
\nrupiah was continuing to react to the downgrading of the
\ncountry's credit rating. The rupiah's plunge also came amid
\nreports of increasing differences between Abdurrahman and Amien,
\nand calls for a Special Session of the Assembly in August to seek
\nthe President's accountability.<\/p>\n
Amien suggested the special session in response to
\nAbdurrahman's call to end the 34-year-old ban on communism.<\/p>\n
But Amien later retreated from his statements, saying a
\nspecial session would not be scheduled when the 700 Assembly
\nmembers convened in August.<\/p>\n
Amien also said on Thursday he had telephoned Abdurrahman to
\nresolve their differences.<\/p>\n
\"This should provide a positive impact on the money market,\"
\nMiranda was quoted as saying by Detikcom online.<\/p>\n
She, however, admitted the market might not react immediately
\nto the news. \"The market reacts fast to negative information, but
\ndoesn't react quickly to positive information. So if negative
\ninformation has come forth, it's not easy to remedy it.\"<\/p>\n
Miranda also said the selective default rating issued by
\nStandard & Poor's was inappropriate because this rating should
\nonly be given to countries which asked for debt forgiveness.<\/p>\n
She said this was not the case with Indonesia when it reached
\nan agreement with the Paris Club of creditor nations in the
\nmiddle of this month to reschedule some US$5.8 billion in
\nsovereign debt.<\/p>\n
Meanwhile, a currency trader said a comment by Bank Indonesia
\nsenior deputy governor Anwar Nasution last week also caused
\njitters in the currency market.<\/p>\n
Anwar was quoted as saying the central bank could not prop up
\nthe rupiah even if it plunged to the 10,000 level against the
\ndollar, because of the bank's limited foreign exchange reserves.<\/p>\n
He said the maximum daily intervention capacity of the central
\nbank was $1 million.<\/p>\n
The trader said the market reacted negatively to the comment,
\nadding that it was inappropriate for a senior central bank
\nofficial to make such statements.<\/p>\n
The central bank has a strong interest in seeing the rupiah
\nstabilize at around 7,000 to the dollar in order to achieve its 3
\npercent to 5 percent underline inflation target for 2000.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin has repeatedly said he
\nwas confident the Rp 7,000 target could be reached because of
\nimprovements in the country's economic fundamentals. (rei)<\/p>",
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