BI says forex reserves enough to defend rupiah<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia said on Friday it was ready to intervene in the
\ncurrency market to protect the rupiah amid worries that domestic
\nantiwar protests could turn violent.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin said on Friday that
\nthe country currently had more than enough foreign exchange
\nreserves to defend the local currency.<\/p>\n
\"We will continue to rely on intervention and money market
\noperations to help the rupiah,\" Sjahril said as reported by Dow
\nJones.<\/p>\n
The country's foreign exchange reserves currently stand at
\nabout US$31 billion.<\/p>\n
The rupiah has been relatively stable since the U.S. launched
\nits attack on Iraq. The local unit closed slightly stronger on
\nFriday at Rp 8,965 per U.S. dollar from Rp 9,030 on Thursday.<\/p>\n
But it is expected that the war in Iraq will spark nation-wide
\nprotests, which could create negative sentiment and put pressure
\non the local unit, particularly if the rallies turn into violent
\nanti-Western protests.<\/p>\n
There are fears that this situation could develop if the war
\ndrags on for a long time.<\/p>\n
Even during the run-up to the war, most Indonesians made it
\nclear they opposed any military solution to the U.S.-Iraq
\nstandoff. The fact that the war is being conducted despite the
\nabsence of UN support adds to the opposition here.<\/p>\n
Such fears are understandable given the country's past
\nexperiences with anti-Western protests.<\/p>\n
There was a wave of anti-Western rallies here in late 2001
\nfollowing the military strikes on Afghanistan by the U.S. and its
\nallies.<\/p>\n
At the time, militant groups also conducted \"sweeps\" against
\nforeigners in the country, prompting several foreign firms to
\ntemporary halt business operations.<\/p>\n
If this were to occur again, it would create jitters in the
\ncurrency market and put pressure on the rupiah, which in turn
\nwould undermine the country's economic recovery.<\/p>\n
But Sjahril said that so far protests had been relatively
\npeaceful, contributing to the relatively stable rupiah.<\/p>\n
Elsewhere, Sjahril said that to help limit the negative impact
\nof the Iraq war on the country's economy, the central bank would
\ncontinue to guide interest rates lower.<\/p>\n
But he was quick to say the pace of the rate decline would be
\nslower than initially projected due to the war.<\/p>\n
The central bank has been guiding its benchmark interest rate
\nlower for the past year. The interest rate is now above 11
\npercent, compared to more than 17 percent late in 2001.<\/p>\n
A lower interest rate environment would help ease the burden
\non the state budget in covering the interest rate on the
\ngovernment's huge domestic debt.<\/p>\n
The lower rate is also expected to make bank borrowing cheaper
\nfor the real sector, allowing for expanded operations.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-says-forex-reserves-enough-to-defend-rupiah-1447893297",
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