BI urged to maintain tight money policy<\/p>\n
JAKARTA (JP): The current strengthening of the rupiah is not
\nyet sustainable and therefore Bank Indonesia should not overreact
\nby relaxing its monetary policy, the Indonesian Economists
\nAssociation's chairman Marzuki Usman suggested on Thursday.<\/p>\n
Marzuki, also minister of tourism, arts and culture, said the
\ncentral bank should maintain its current tight monetary policy
\nuntil the exchange rate was really stable.<\/p>\n
\"If Bank Indonesia is lured to lower rates just because of the
\ncurrent strengthening of the rupiah, and inject funds into the
\nmarket again, then in a short time, rupiah will weaken again,\"
\nMarzuki said.<\/p>\n
Bank Indonesia has moved to lower the benchmark rates of its
\none-month promissory notes (SBIs) from over 70 percent in early
\nSeptember to below 60 percent now following the rupiah's climb.<\/p>\n
He said the rise of the rupiah to between 8,000 and 9,000
\nagainst the U.S. dollar now, from over 10,000 in September, was
\nnot caused by domestic factors, but rather by the weakening of
\nthe greenback against global major currencies.<\/p>\n
\"I think the weakening of the U.S dollar has been engineered
\nbecause of the looming global depression which could drag on the
\nUnited States,\" Marzuki was quoted by Antara as saying.<\/p>\n
He said the United States was aware of the danger of keeping
\nthe dollar high as it could lead to the recurrence of the global
\ndepression of 1933.<\/p>\n
Besides the weakening dollar, the rupiah's strength was also
\nboosted by market talk of the possible imposition of government
\ncapital controls, Marzuki said.<\/p>\n
He said the market should not worry about the capital control
\nissue, stressing that the government would only improve the
\nmonitoring of capital flows.<\/p>\n
The monitoring is needed because \"we are now too free. Even in
\nthe U.S., there are records of capital flows,\" he said. (29)<\/p>",
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