Fund managers told dollars available<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad challenged
\nspeculators yesterday with the announcement that the government
\nwill meet all their demands for U.S. dollars.<\/p>\n
\"I challenge everybody. How many dollars do they want, I'll
\npay. Even for forward purchases. It doesn't matter,\" Mar'ie told
\njournalists after addressing a seminar conducted by the Prasetia
\nMulya School of Management yesterday.<\/p>\n
Mar'ie made the remarks in response to rumors that foreign
\nfund managers, fearing that the Indonesian government would
\ndevaluate the rupiah as Mexico did, dumped rupiah and bought U.S.
\ndollars and other foreign units.<\/p>\n
Mexico devaluated its peso by 15 percent on Dec. 20. The
\nimpact of the move has caused the currency to lose nearly 70
\npercent of its pre-devaluation level against the green back.<\/p>\n
The minister pleaded that people should not speculate on the
\ndevaluation of the rupiah because the Indonesian economy bears no
\nresemblance at all to that of Mexico, which is suffering an
\neconomic crisis following last month's devaluation.<\/p>\n
\"Nothing to worry about. Don't just believe in rumors,\" Mar'ie
\npleaded.<\/p>\n
Supporting Mar'ie's contention, the Governor of Bank Indonesia
\n(the central bank), J. Soedradjad Djiwandono, told the seminar
\nthat the Indonesian economy is in solid condition and the ratio
\nof its current account deficit to the gross domestic product is
\nstill at a healthy level of 2.1 percent, as compared to some
\neight percent in Mexico.<\/p>\n
\"Indonesia's economic growth of seven percent is much higher
\nthan the 2.9 percent in Mexico,\" he told the seminar
\nparticipants, adding that the credit rating of Indonesia is
\nTriple B while that of Mexico is only Double B Plus.<\/p>\n
Soedradjad said the central bank opened its office on
\nSaturday, which it usually does not, for those who wanted to
\npurchase dollars.<\/p>\n
The opening of the foreign exchange clearing on Saturday, he
\nsaid, was part of the central bank's efforts to stem the rush for
\nthe dollar.<\/p>\n
Buying<\/p>\n
Soedradjad told reporters following the seminar that Bank
\nIndonesia bought $500 million in American greenbacks last week to
\nstabilize the rupiah, which declined to its low of Rp 2.285
\nagainst the dollar on the spot market Thursday.<\/p>\n
The value of the rupiah against the dollar strengthened to Rp
\n2,219 on Friday afternoon following the central bank's
\nintervention.<\/p>\n
The central bank governor appealed to local businesses not to
\nbe affected by the actions of the foreign fund managers, whom, he
\nsaid, were not really well informed about Indonesia's economic
\ncondition.<\/p>\n
\"If you pull your money out of Indonesia, where will you
\ninvest your money,\" he said as he tried to convince business
\npeople that Indonesia not only has strong economic fundamentals
\nbut also is much more attractive than most of developing
\ncountries or even some industrialized nations.<\/p>\n
He explained that besides the fact that the position of its
\ncurrent account deficit is still much lower than the
\ninternational standard, Indonesia still holds a significant
\namount of foreign reserves.<\/p>\n
\"Indonesia's foreign reserves are approximately $13.7 billion
\nat present,\" he said, adding that the reserves, excluding short-
\nterm funds, are enough to finance five months of imports, or much
\nlonger than the minimum standard of three months.<\/p>\n
\"In addition the central bank has a standby loan of
\napproximately $2 billion in overseas banks,\" he said of Bank
\nIndonesia's financial strength.<\/p>\n
He said he believed that the situation would return to normal
\nthis week as \"playing\" with dollars could be costly for
\nindividuals or institutions as they have to pay a high spread
\nwhen they resell the currency.<\/p>\n
The central bank expanded the spread of the buying and selling
\nrates for the U.S. dollar to Rp 30 in September last year from Rp
\n20 in late 1993 and Rp 10 in early 1993 in efforts to curb
\nspeculative trading.<\/p>\n
Soedradjad said the central bank has no plan to widen the
\nspread again even though the current margin has not been
\neffective enough to curb the speculation.<\/p>\n
Tycoons Eka Tjipta Widjaja and Sofjan Wanandi yesterday hailed
\nthe government's assurance that it will not follow Mexico's path.
\nSofjan, president of the Gemala Group, said that capital outflow
\nis very small and temporary and it is only done by foreign fund
\nmanagers.<\/p>\n
\"I believe that they will very soon buy the rupiah again,\"
\nSofjan told journalists.<\/p>\n
Economists Mari Pangestu and Djisman S. Simandjuntak shared
\nthe view that the impact of Mexico's crises on Indonesia and
\nother emerging Asian markets is over. (rid\/hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fund-managers-told-dollars-available-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}