Economists confident about rupiah<\/p>\n
JAKARTA (JP): Economists are confident that Indonesia's
\neconomic fundamentals are strong enough to withstand speculative
\nattacks on the rupiah.<\/p>\n
Chairman of the Association of Private National Banks'
\nadvisory board, I Nyoman Moena, said yesterday that unlike
\nThailand and the Philippines which have had to devalue their
\ncurrencies following speculative attacks, Indonesia's macro
\neconomy was relatively stable.<\/p>\n
"It will be difficult for speculators to do anything," he
\nsaid.<\/p>\n
"I don't think there will be a devaluation as a result of
\nspeculators' attacks," he said.<\/p>\n
Economist Dibyo Prabowo said it was unlikely the government
\nwould devalue the rupiah soon.<\/p>\n
"I believe the government will be very careful ... The
\n(central bank) Bank Indonesia's decision to widen the (dollar-
\nrupiah) spread last week will hopefully rule out devaluation in
\nthe near future," he said.<\/p>\n
Minister\/State Secretary Moerdiono also said, after meeting
\nPresident Soeharto at Merdeka Palace yesterday, that the
\nfundamentals of the Indonesian economy were strong enough to
\nwithstand the pressures of speculative attacks on the rupiah.<\/p>\n
Bank Indonesia on Friday widened the dollar-rupiah band, in
\nwhich the rupiah can float before the central bank intervened, to
\n12 percent from 8 percent. The move was made the day the
\nPhilippine peso was devalued, following the devaluation of the
\nThai baht early this month.<\/p>\n
Dibyo said that unlike Indonesia, Thailand and the Philippines
\nseldom devalued their currencies.<\/p>\n
"So we don't necessarily have to copy what they did," he said.<\/p>\n
Moena, despite his strong confidence, suggested nonetheless
\nthat the government continue to strengthen its foreign exchange
\nreserves, increase cooperation with central banks in the region
\nand prepare adequate stand-by loans to strengthen foreign
\nexchange reserves.<\/p>\n
He said the government should anticipate the worse impact of
\nspeculative attacks on the rupiah, which brought the currency
\ndown 20 points in Friday's trading.<\/p>\n
The rupiah slid to a low Rp 2,470 to the dollar early
\nyesterday before it recovered to Rp 2,452 to 2,456 around noon.<\/p>\n
"If speculators know that foreign currency reserves are
\nscarce, they can easily calculate the profits they can reap from
\nthe weak macro economic condition," he said.<\/p>\n
Dibyo said Indonesia should further bolster its exports as
\nthis would in turn strengthen the rupiah's value against the U.S
\ndollar.<\/p>\n
"Hopefully widening the intervention band will encourage
\nexports and discourage imports, particularly imports of consumer
\ngoods," he said.<\/p>\n
Bank Indonesia's rupiah intervention band was expanded on
\nFriday to between Rp 2,374 and Rp 2,678 to the U.S dollar.<\/p>\n
According to Bank Indonesia's figures, foreign exchange
\nreserves as of June were US$21.08 billion, or sufficient for five
\nmonths of imports.<\/p>\n
Bank Indonesia has stand-by loans which can be used any time
\nto stabilize the rupiah and has repurchasing agreements (repos)
\nwith central banks in other Asian countries.<\/p>\n
Repos give participants instant access to cash, to defend
\ntheir currencies against excessive volatility, by selling their
\nholdings in U.S government bonds to partners with a promise to
\nbuy them back later.<\/p>\n
In Tokyo yesterday, Indonesia's central bank governor and Bank
\nof Japan's governor said in a meeting on Asian currency markets
\nthat they would cooperate closely in financial markets, Bank of
\nJapan's executive director, Takashi Anzai, said.<\/p>\n
"The Bank of Japan and the Indonesian central bank agreed to
\nmaintain close cooperation in various areas," Anzai was quoted by
\nReuters as saying.<\/p>\n
He declined to give any details about the areas in which the
\ntwo intended to cooperate.<\/p>\n
Anzai said that at the meeting between Soedradjad Djiwandono
\nand Bank of Japan Governor Yasuo Matsushita, Soedradjad made no
\nspecific request of BOJ.<\/p>\n
The Indonesian central bank governor is in Tokyo now as a
\nmember of the Indonesian delegation to the annual meeting
\nof the Consultative Group on Indonesia, a creditor consortium,
\nbeginning today.<\/p>\n
"The fundamentals of our economy are strong and the band for
\nour (central bank) intervention on the rupiah is quite wide,"
\nMoerdiono said.<\/p>\n
He said the government's move Friday to widen the dollar-
\nrupiah band was to make the fundamentals of the economy even
\nstronger.<\/p>\n
The move was to anticipate attacks on the Indonesian currency,
\nhe said.<\/p>\n
"Whoever dares speculate on the rupiah will only lose." (pwn)<\/p>\n
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