BI vows to do its utmost to defend rupiah<\/p>\n
JAKARTA (JP): Bank Indonesia will do everything in its power
\nto prop up the rupiah and prevent it from sliding even further,
\nGovernor of Bank Indonesia Sjahril Sabirin announced on
\nWednesday.<\/p>\n
\"Bank Indonesia is ready to intervene in the local unit if
\nnecessary,\" he told reporters.<\/p>\n
There had been rumors later in the day that the central bank
\nhad stepped in by selling around US$20 million.<\/p>\n
Sjahril also said that Bank Indonesia would not follow the
\nU.S. Federal Reserve, which had cut interest rates by 50 basis
\npoints earlier this week.<\/p>\n
On Wednesday's weekly auction, the benchmark interest rate of
\nBank Indonesia's one-month SBI promissory notes was unchanged at
\n17.66 percent.<\/p>\n
The rupiah has been under pressure over the past three days,
\nwhich analysts said was due to a combination of high corporate
\ndollar demand to repay debt and the uncertainty created by last
\nweek's terrorist attacks on the U.S.<\/p>\n
The rupiah ended lower at Rp 9.615 per U.S. dollar late on
\nWednesday compared to Rp 9,540 on Tuesday.<\/p>\n
The local currency soared to as high as Rp 8,200 as confidence
\nin the economy improved following the appointment of President
\nMegawati Soekarnoputri late in July and the formation of a
\ncredible Cabinet team.<\/p>\n
The government has targeted an average exchange rate of Rp
\n9,600 for this year, which means that the currency must stabilize
\nat around Rp 8,400 throughout the remaining period of the year as
\nit had been hovering below Rp 10,000 for quite some time.<\/p>\n
Analysts, however, feared that the currency could drop to
\nbelow the Rp 10,000 level again amid concerns that U.S.
\nretaliation might trigger a new round of political uncertainty in
\nthe country, which has the world's largest Muslim population.<\/p>\n
The U.S. government has singled out Saudi Arabia-born
\nmillionaire Osama bin Laden as the prime suspect in the attacks.
\nBin Laden is believed to have stayed in Afghanistan as a guest of
\nthe Taliban government.<\/p>\n
Some say that Megawati's visit to the U.S. this week could
\ntrigger unrest at home particularly if the U.S. government did
\nattack Afghanistan.<\/p>\n
Separately, Bank Indonesia deputy governor Miranda Goeltom
\nsaid that the weakening of the rupiah was partly due to the
\npostponement of the Paris Club talks.<\/p>\n
\"The market sentiment is negative because the IMF and the
\nParis Club were forced to postpone their meetings due to the New
\nYork terrorist incident,\" Miranda said.<\/p>\n
The International Monetary Fund (IMF) and the World Bank are
\npostponing their annual meetings slated for Sept. 29 and Sept. 30
\nbecause of security concerns following the attacks against the
\nU.S. It is not yet certain when the meetings will be resumed.<\/p>\n
The Paris Club of creditor nations was expected to meet with
\nthe government last week to discuss the rescheduling of
\nIndonesia's sovereign debts maturing in 2001 and 2002. The
\nmeeting was postponed because U.S. representatives were unable to
\ntravel to Paris following the terrorist attacks.<\/p>\n
Miranda said that the negative sentiment was unfounded as the
\npostponement of the meetings would not effect the club's decision
\non the rescheduling of Indonesia's sovereign debts.<\/p>\n
Meanwhile, the Jakarta Stock Exchange (JSX) ended higher on
\nWednesday due to a rebound in a couple of blue chip stocks.<\/p>\n
The JSX composite index ended up 2.1 percent or 8.617 points
\nat 422.450 points.<\/p>\n
Dealers said that sentiment had improved after the U.S. market
\nfell only slightly on Tuesday. The Dow Jones Industrial Average
\nclosed down 17.30 points, or 0.2 percent at 8,903.40.<\/p>\n
The U.S. stock market fell sharply when it resumed trading on
\nMonday, after a four-day closure following the terrorist attacks.<\/p>\n
Meanwhile, AP reported that U.S. stocks stabilized in early
\ntrading on Wednesday with tentative buying easing the selling
\npressure that depressed Wall Street in the aftermath of the
\nterrorist attacks.<\/p>\n
In the first hour of trading, the Dow Jones industrials rose
\n26.34 points to 8,930.04. (tnt)<\/p>",
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