BI will not move toward capital controls: Syahril<\/p>\n
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin stressed
\non Friday that the central bank would not impose capital controls
\nto stabilize the beleaguered rupiah.<\/p>\n
Sjahril said the current central bank law prevented Bank
\nIndonesia from taking such a step.<\/p>\n
\"We will never move toward capital controls. We'll continue to
\nadopt the free foreign exchange system as has been formulated in
\nthe Bank Indonesia law,\" he said following Friday prayers at the
\ncentral bank's headquarters.<\/p>\n
\"(The free foreign exchange system) will remain in effect,\" he
\nadded.<\/p>\n
Sjahril was responding to fears that Bank Indonesia might move
\ntoward imposing capital controls following the issuance of a
\ncontroversial foreign exchange ruling which limits rupiah-
\ndenominated transactions between onshore banks and nonresidents.<\/p>\n
Some economists and politicians have in the past called on the
\ncentral bank to adopt a capital control system similar to
\nMalaysia's, and to force exporters to repatriate their dollar
\nearnings to help stabilize the rupiah.<\/p>\n
Sjahril said that Bank Indonesia would not expand the
\nlimitations on rupiah transactions beyond what was stipulated in
\nthe new ruling.<\/p>\n
\"There's no need to move further beyond the (new ruling).
\nIt's certain that we will not impose capital controls.<\/p>\n
\"The new limitations are already sufficient to help stabilize
\nthe exchange rate,\" he said.<\/p>\n
Bank Indonesia announced the new ruling earlier this week,
\nputting in place two substantial limitations: a ban on onshore
\nbanks from making certain rupiah transactions with nonresidents,
\nincluding foreign individuals and institutions; and lowering the
\nlimit of forward transactions between local banks and
\nnonresidents without an underlying investment transaction to US$3
\nmillion from $5 million.<\/p>\n
Bank Indonesia has said that the new rules are aimed at
\nhelping curb speculation on the rupiah, which fell by more than
\n25 percent over the course of last year.<\/p>\n
But Sjahril said that other factors, including domestic social
\nand political uncertainties, also affected the exchange rate of
\nthe rupiah.<\/p>\n
The rupiah strengthened slightly to Rp 9,445 against the US
\ndollar late on Friday, up from Rp 9,470 on Thursday.<\/p>\n
The new ruling caused initial confusion among currency dealers
\nand foreign bankers, prompting the International Monetary Fund to
\ncall on Bank Indonesia to provide clarification. Foreign bankers
\nmet with Bank Indonesia officials on Wednesday.<\/p>\n
According to reports, the new ruling has cut off a source of
\nincome for certain foreign banks that have been active in
\ncurrency trading.<\/p>\n
Meanwhile, Bank Indonesia Deputy Governor Miranda Goeltom was
\nquoted by Reuters as saying at a gathering with foreign
\njournalists on Friday that the central bank had no intention of
\nimposing capital controls, and that the new ruling was aimed at
\nstabilizing the rupiah.<\/p>\n
Miranda made the following points about the new ruling:
\n* Jakarta-based foreign banks are classified as residents;
\n* Nonresidents investing in the local stock market have no cause
\nfor concern over the ruling;
\n* Bank Indonesia will leave offshore rupiah deposits to market
\nmechanisms;
\n* It may take the market from one to two months to digest the new
\nrules;<\/p>\n
Separately, Minister of Finance Prijadi Praptosuhardjo
\nwelcomed the new foreign exchange ruling, saying he hoped it
\nwould help strengthen the battered rupiah.<\/p>\n
Prijadi said on Friday the rupiah's current exchange rate did
\nnot reflect the true economic fundamentals of the country.<\/p>\n
Speaking to journalists following a meeting with the House of
\nRepresentatives budget committee, he said the rupiah should be
\nstronger than its current level because the country's main
\neconomic indicators were positive.<\/p>\n
The government projects the rupiah to be at an average rate of
\nRp 7,800 to the dollar this year.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-will-not-move-toward-capital-controls-syahril-1447893297",
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