BI says pressure on rupiah to be short-lived<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia senior deputy governor Anwar Nasution said on
\nWednesday that the current weakening of the rupiah would be
\nshort-lived.<\/p>\n
In a statement aimed at trying to calm nervous financial
\nmarkets following the deadly bomb attack at the JW Marriott Hotel
\nin Jakarta, Anwar said the central bank now had a better
\nmonitoring system and stronger foreign exchange reserves to help
\ndefend the rupiah.<\/p>\n
\"Bank Indonesia is ready to anticipate threats against the
\nrupiah. Nothing to be worried about, we have what it takes to
\nstabilize the rupiah,\" Anwar told reporters.<\/p>\n
\"... And our track record in handling similar situations has
\nalso been good,\" he added, referring to the relatively quick
\nrecovery of the rupiah following the bomb attack in Bali last
\nyear and other negative incidents.<\/p>\n
Aside from its convincing international reserves -- currently
\nat around US$34 billion -- Anwar said the optimism was also based
\non the central bank's ability to quickly gather market
\ninformation and its tighter supervision of banks, which means
\nthat Bank Indonesia could immediately detect speculation
\nactivities against the local unit.<\/p>\n
The rupiah ended slightly higher on Wednesday at Rp 8,600 per
\nU.S. dollar, after falling by 2.1 percent to 8,665 on Tuesday
\nafter the bomb blast. Reports that the central bank was ready to
\nintervene in the market, pushed the rupiah higher to 8,550 before
\nlunch break.<\/p>\n
Dealers said that the central bank was not seen making
\nintervention.<\/p>\n
But they said that overall sentiment remained weak against the
\nlocal unit as the bomb incident renewed concern of the
\ndifficulties in curbing terrorism and the negative impact on the
\neconomy. Investors were also still waiting to see how the
\ngovernment would handle the situation.<\/p>\n
In a sign to show its confidence in the economy, the central
\nbank continued to reduce its benchmark rate on Wednesday to 9.07
\npercent from 9.10 percent the previous week.<\/p>\n
The interest rate on the three-month Bank Indonesia SBI
\npromissory notes was also lowered to 9.07 percent from 9.18
\npercent.<\/p>\n
The increase in the value of the rupiah since early this year
\nhas been seen as a key factor contributing to the current benign
\ninflation level, which in turn provides greater room for the
\ncentral bank to continue cutting its interest rates. But the
\nhard-won stability in these macroeconomic indicators was put
\nunder threat by Tuesday's blast.<\/p>\n
Meanwhile, Bank Buana president Pardi Kendy was also
\noptimistic that the pressure on the rupiah would be short-lived,
\nprovided the government immediately takes credible action to
\nsolve the bomb attack.<\/p>\n
\"Hopefully similar occurrences will not happen again. If
\nthat's the case, the rupiah will become stable again and it may
\neven move in a range of 8,500 per dollar,\" Pardi said.<\/p>\n
Dradjad Wibowo, an analyst at the Institute for the
\nDevelopment of Economics and Finance (Indef), concurred.<\/p>\n
\"It is important for Bank Indonesia to keep the rupiah below
\n8,700 per dollar in the next couple of days, to give positive
\nsignals to investors.<\/p>\n
\"Because once the rupiah hits above that level, I fear it
\nwould become uncontrollable,\" he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-says-pressure-on-rupiah-to-be-short-lived-1447893297",
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