Lowering forward position limit an option, says Anwar<\/p>\n
JAKARTA (JP): Bank Indonesia senior deputy governor Anwar
\nNasution said on Monday that lowering the maximum US$5 million
\nopen forward position was an option to help curb speculation in
\nthe rupiah.<\/p>\n
But Anwar said the central bank had not yet reached a firm
\ndecision on whether to implement such a policy.<\/p>\n
\"We are still thinking this over. We'll see. There's nothing
\nfinal yet, so it's not certain whether it will be lowered,\" he
\ntold reporters on the sidelines of the inauguration ceremony of
\nthe new chairman of the Indonesian Bank Restructuring Agency.<\/p>\n
Anwar added that such a policy does not require any approval
\nfrom the International Monetary Fund (IMF), which is providing
\nthe country with a multibillion dollar bailout.<\/p>\n
Anwar was responding to earlier reports that the central bank
\nwas planning to cut down the limit on the open forward position.<\/p>\n
Under the existing regulation, banks operating in the country
\ncan only hold an open forward position in the U.S. dollar\/rupiah,
\nat the maximum of $5 million, with any single overseas bank.<\/p>\n
The rupiah has been under strong pressure lately, dropping by
\nmore than 20 percent from its level early this year.<\/p>\n
The government and the central bank said last week that it
\nwould launch measures to curb speculation on the rupiah. The
\nmeasures include strengthening the on-site supervision of banks
\nactive in foreign exchange transactions and monitoring
\nnonresidents' rupiah accounts more tightly.<\/p>\n
The statements made with regard to launching measures to curb
\nrupiah speculation has been viewed by some in the currency market
\nas plans to take some form of a currency control similar to that
\nadopted by Malaysia.<\/p>\n
Some say the IMF might finally allow Indonesia to launch such
\na drastic measure.<\/p>\n
Bank Indonesia officials have repeatedly denied this.<\/p>\n
News that the government and Bank Indonesia would launch
\nmeasures to help curb currency speculation had helped strengthen
\nthe local currency.<\/p>\n
The rupiah strengthened to Rp 9,075 per U.S. dollar during the
\nday but declined again to Rp 9,160 late in the day, unchanged
\ncompared to Friday's close.<\/p>\n
Dealers said the strong demand for U.S. dollars to repay
\ncorporate overseas debts had put pressure again on the rupiah.<\/p>\n
Bank Indonesia officials admitted there had been a genuine
\ndemand for dollars to repay maturing corporate overseas debts
\nwhich would amount to $1.6 billion this month and $3.5 billion in
\nDecember.<\/p>\n
The government has also blamed domestic political instability
\nas another factor in causing the rupiah to fall. Some opponents
\nof President Abdurrahman Wahid have stepped up pressure to force
\nthe President to step down as violence and unrest continued to
\ngrip several parts of the country.<\/p>\n
The government has assumed the rupiah at Rp 7,000 per dollar
\nin the current 2000 state budget and Rp 7,300 per dollar for the
\n2001 budget, but the local currency had been hovering at more
\nthan Rp 8,500 over the past several months.<\/p>\n
Meanwhile Dow Jones reported that other Asian currencies were
\nmostly higher against the U.S. dollar on Monday, led by a sharp
\nrally in the Philippine peso and healthy gains on most regional
\nstock exchanges.<\/p>\n
The dollar's weakness following the European Central Bank's
\nintervention last Friday to boost the euro, also aided the rise
\nin most regional currencies.<\/p>\n
In Manila, the peso rallied by as much as three pesos against
\nthe dollar, or nearly six percent, on reports in the Singapore
\nand Philippines press that President Joseph Estrada and former
\npresident Cory Aquino - one of the leaders leading the anti-
\nEstrada movement - were in talks over his early resignation.<\/p>\n
Meantime, the Singapore dollar was slightly higher against its
\nU.S. counterpart in Asia late Monday, though it gave up some of
\nits gains late in the session after local corporations bought the
\nU.S. currency when it dipped briefly below the S$1.7300 level.<\/p>\n
Around 0836 GMT, the U.S. dollar was trading at S$1.7315, down
\nfrom S$1.7339 late Friday in Asia.<\/p>\n
In Seoul, the won closed higher against the dollar on a
\nmarginal easing of investor concerns about ailing Hyundai
\nEngineering & Construction Co. and Daewoo Motor Co., dealers
\nsaid.<\/p>\n
The dollar dropped as low as 1,131 won early in the session.<\/p>\n
In Asia late Monday, the dollar finished at 1,132.70 won, down
\nfrom Friday's close of 1,133.60 won.<\/p>\n
In Taipei, the New Taiwan dollar finished higher against the
\nU.S. dollar on local currency buying by foreign equity investors
\nand on U.S. dollar selling by Taiwanese exporters, dealers said.<\/p>\n
At 0800 GMT (3:00 a.m. EST), the U.S. dollar ended at
\nNT$32.149, down from NT$32.196 Saturday.(rei)<\/p>",
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