Govt takes no action as rupiah dips<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Rather than taking real actions to send positive signals to the
\nmarket and prevent the rupiah from falling, President Susilo
\nBambang Yudhoyono instead appealed to the nation \"to stick
\ntogether for more constructive measures\" to overcome the
\nsituation.<\/p>\n
No concrete measures were offered by the President to calm the
\nmarket at a time when the rupiah showed no signs of ending its
\ndownward slide, closing on Wednesday at Rp 10,271 a dollar, down
\n1.8 percent from Tuesday's closing of Rp 10,090, its lowest since
\nFebruary 2002.<\/p>\n
Susilo met with Bank Indonesia on Wednesday evening to address
\nthe issue.<\/p>\n
The currency has so far depreciated by 9 percent throughout
\nthe year, which is among the worst performing currencies in the
\nregion.<\/p>\n
The rupiah kept weakening as local demand for the American
\ngreenback for import needs -- particularly for oil imports --
\ncontinued to overwhelm the scarce supply of dollars in the
\ncountry from exports and investment.<\/p>\n
The situation has only worsened as global oil prices have
\nrecently been on an upward trend, lingering above $60 a barrel.<\/p>\n
Although Indonesia exports oil, the country is likely to be a
\nnet oil importer this year. It also exports its oil based on the
\nIndonesian Crude Price, which is lower than the international oil
\nprice.<\/p>\n
The rupiah's constant decline has created a domino effect, as
\nIndonesia's stock and bond prices also fell, on fears that the
\ncentral bank will raise key interest rates to support the
\ncurrency.<\/p>\n
On the back of the rupiah's latest slump, Indonesia's main
\nstock index fell 2.9 percent, after the central bank raised a key
\ninterest rate to help boost the rupiah from a three-year low.<\/p>\n
The Jakarta Composite Index fell for the ninth straight
\ntrading day, closing 2.9 percent down to 1035.45.<\/p>\n
Meanwhile, the price and yield of Indonesian bonds were also
\naffected by the rupiah's slump.<\/p>\n
The price of Indonesian bonds due in June 2013 fell 1.75, or
\nRp 17,500 per 1 million, to 100.25. Its yield rose 37 basis
\npoints to 14.18 percent, according to Deutsche Bank
\nInternational.<\/p>\n
Despite the gloomy situation, the government still showed no
\nparticular concern, convinced that the rupiah's movement is
\naccording to market forces.<\/p>\n
\"Our foreign exchange reserve is still safe,\" Coordinating
\nMinister for the Economy Aburizal Bakrie said, while blaming the
\nrupiah's current state partly on the rising state budget deficit
\nfrom the fuel subsidy, forcing it to seriously consider speeding
\nup plans to increase domestic fuel prices.<\/p>\n
The central bank, meanwhile, continued its all-out market
\nintervention on Wednesday to curb the rupiah's decline.<\/p>\n
Bank Indonesia (BI) raised its one-week overnight deposit rate
\nfor banks by 0.25 percent to 7.5 percent to absorb excess
\nliquidity and to stem the rupiah's fall.<\/p>\n
Speaking after the meeting with BI, Susilo said the government
\nshould reduce the deficit for the sake of fiscal sustainability
\nbut without creating a negative impact on people of the low
\nincome bracket.<\/p>\n
\"We are working to reach the balance,\" he said.<\/p>\n
He also called on speculators not to take advantage of the
\nsituation.<\/p>\n
Susilo was upbeat that his administration would be able to
\ndefend the rupiah to the level set in the 2006 state budget draft
\nof Rp 9,400 a dollar.<\/p>\n
\"It is really complex, but we are sure that we can stick
\ntogether to improve the situation,\" the President said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-takes-no-action-as-rupiah-dips-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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