BI vows to defend rupiah if necessary<\/p>\n
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on
\nFriday that the central bank would take necessary measures to
\ndefend the rupiah if the local unit weakened due to a delay in
\nthe announcement of the new Cabinet.<\/p>\n
Sjahril said that he had instructed the central bank's money
\nmarket division to closely monitor movements of the local
\ncurrency.<\/p>\n
\"I can't disclose what measures will be taken by BI, but I
\nhave instructed staff in the (money) market division to intervene
\nif necessary,\" Sjahril said.<\/p>\n
The rupiah closed higher at Rp 9,500 per U.S. dollar late on
\nFriday, from Rp 9,640 on Thursday, following the remarks. Dealers
\nsaid that state banks had sold dollars on behalf of Bank
\nIndonesia.<\/p>\n
Sjahril said that postponing notification of the Cabinet
\nlineup had weakened sentiment in the rupiah.<\/p>\n
There has been concern in the currency market that the delay
\nhas been caused by heavy political lobbying among major political
\nparties vying for posts in the Cabinet of President Megawati
\nSoekarnoputri. This may undermine the capabilities of the new
\nCabinet.<\/p>\n
Sjahril, however, expected that negative sentiment in the
\nrupiah would only be temporary.<\/p>\n
Sjahril said that the market should realize that the President
\nmay have delayed the decision because she needed more time to
\nform a credible and strong Cabinet team.<\/p>\n
He said that if the market recognized this positive aspect
\nthen the rupiah would strengthen again.<\/p>\n
The rupiah soared to a six-month high following the
\nappointment of Megawati last week.<\/p>\n
Megawati was expected to announce her Cabinet on Friday, but
\ndelayed the event until next week.<\/p>\n
The recent strengthening of the local unit allowed the central
\nbank to decrease the interest rate of Bank Indonesia one-month
\nSBI promissory notes to 17.15 percent on Wednesday, slightly
\nlower than 17.17 percent in the previous week.<\/p>\n
Sjahril was quick to assert that this move should not be
\ninterpreted as a precedent for a continued decline of the
\nbenchmark interest rate in the near future.<\/p>\n
He said that the interest rate would only decline if there was
\nstronger confidence in the market. He did not elaborate any
\nfurther.<\/p>\n
Bank Indonesia has adopted a tight monetary policy by raising
\nthe benchmark interest rate in a bid to help curb inflationary
\npressure and stabilize the local currency.<\/p>\n
The Central Bureau of Statistics (BPS) reported earlier this
\nweek that inflation remained high in July, lifting the year-on-
\nyear inflation rate to 13.04 percent.(hbk\/bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-vows-to-defend-rupiah-if-necessary-1447893297",
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