No plans yet to cut yen forex reserves, says BI<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia said it had no plans yet to cut its yen
\ndenominated foreign exchange reserves in reaction to Japan's
\npolicy to weaken the yen in favor of boosting its export sales.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin said the central bank
\nwas monitoring daily the need to decrease or increase its yen
\nreserves.<\/p>\n
When asked last week whether Bank Indonesia would cut its yen
\nreserves, he said, "not just yet".<\/p>\n
Japan has been devaluating the yen in an effort to boost
\nexport sales, and pull its economy out of a recession.<\/p>\n
This month alone the currency lost 7 percent of its value as
\nit sank to around 131 against the U.S. dollar, the lowest level
\nin over three years.<\/p>\n
A lower yen would reduce the overall value of Bank Indonesia's
\nforeign exchange reserves, which amounts to about US$28 billion.<\/p>\n
Bank Indonesia officials refused to say how much yen the
\ncountry's foreign reserves was holding.<\/p>\n
In the late eighties, Bank Indonesia is said to have suffered
\nheavy losses when it was too late in converting its devaluated
\nyen reserves into dollars. At that time, the yen's fall had
\nalready hit its bottom.<\/p>\n
While the current steep fall of the yen raises concerns on the
\ndollar value of the country's foreign reserves, a rise in the yen
\ncould be even more worrisome.<\/p>\n
A stronger yen would add to the country's debt burden as a
\nportion of yen-denominated debts are paid back in dollars.<\/p>\n
In the mid-nineties, a sharp surge in the yen against the
\ndollar sent Bank Indonesia scrambling to raise its yen base
\nreserves.<\/p>\n
Former Bank Indonesia's governor Soedradjad Djiwandono has
\nsaid that following the surge in the yen, the central bank raised
\nthe yen portion of the country's foreign reserves to 36 percent
\nin 1996, from 27 percent in 1993.<\/p>\n
Meanwhile, Sjahril added the weakening of the rupiah last week
\nwas more driven by local trading factors than the yen's fall.<\/p>\n
Currency analyst Farial Anwar concurred saying the weakening
\nof the yen had had only a minor impact on the rupiah's movements.<\/p>\n
While other East Asian currencies tracked the yen's fall, he
\nsaid, the rupiah had moved within an isolated trading range.<\/p>\n
"The rupiah is moving on its own without influence from its
\nregional peers," Farial explained.<\/p>\n
Dealers have said that local companies were seen buying the
\ndollar so that they can pay their foreign debts maturing next
\nyear.<\/p>\n
He said the central bank should also maintain the current yen
\ncomposition in its foreign exchange reserves.<\/p>\n
According to him, not only is the current yen composition
\nsmall, the Japanese currency may have also stop depreciating.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/no-plans-yet-to-cut-yen-forex-reserves-says-bi-1447893297",
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"sponsor": "Okusi Associates",
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