No rupiah devaluation: Soeharto<\/p>\n
JAKARTA (JP): President Soeharto made it clear yesterday that
\nIndonesia has no plans to devalue the rupiah or to reschedule its
\nforeign debt.<\/p>\n
\"The government has no reason to devalue the rupiah or
\nreschedule its foreign debts,\" the President was quoted by
\nMinister\/State Secretary Moerdiono as saying.<\/p>\n
Moerdiono, asked about the President's response to the dollar
\nrush in the money market last week, said that the speculative
\ntrading of the U.S. greenback was irrational.<\/p>\n
The dollar rush rocked most emerging markets in Asia,
\nincluding Indonesia, Malaysia, Thailand and the Philippines,
\nfollowing the devaluation of the Mexican peso, which caused a
\nmassive capital outflow from the Latin American country.<\/p>\n
Foreign fund managers, fearing that Indonesia would also carry
\nout a Mexican-style devaluation, cashed in their Indonesian
\nportfolio investments and bought U.S. dollars.<\/p>\n
\"The people have no reason to fear that there would be another
\ndevaluation of the rupiah,\" Moerdiono said, adding that the
\ndevaluation of the rupiah in 1986 \"hurt the government\" and that
\nit would not be repeated.<\/p>\n
Moerdiono also confirmed that the government has no intention
\nto reschedule its foreign debt.<\/p>\n
As at the end of September, the country's total foreign debt
\nstood at $93 billion, of which $56.66 billion was owed by the
\ngovernment and the remaining $36.34 billion by the private
\nsector.<\/p>\n
Bank Indonesia Governor J. Soedradjad Djiwandono and Minister
\nof Finance Mar'ie Muhammad described the dollar rush as the
\nirrational actions of people who did not understand the
\nIndonesian economy.<\/p>\n
Both said that the fundamentals of Indonesia's economy are
\nmuch stronger than those of Mexico, which not only has heavy
\nforeign debts but also a huge foreign account deficit.<\/p>\n
Indonesia, whose ratio of the current account deficit against
\nthe gross domestic product is only around 2.3 percent as compared
\nto eight percent in Mexico, has never defaulted its foreign
\ndebts.<\/p>\n
Interest<\/p>\n
To further pacify the money market, Bank Indonesia (the
\ncentral bank) yesterday raised discount rates on short-term
\ncommercial papers by a half-percentage point in a fresh move to
\nstabilize the rupiah.<\/p>\n
The discount rate for one-week money market securities (SBPUs)
\nwas raised to 15 percent per annum from 14.5 percent previously,
\ntwo-week securities to 15.25 percent from 14.75 percent and
\ncommercial papers with a maturity of 28 days to 15.75 percent
\nfrom 15.25 percent.<\/p>\n
A Bank Indonesia official said that the rise in interest rates
\non SBPUs, the central bank's instrument to add the liquidity in
\nthe money market through the purchase of commercial papers, was
\nthe fourth since August.<\/p>\n
No official statement was available from the central bank but
\nanalysts said that the move would help ease the rush for the U.S.
\ndollar.<\/p>\n
The rise in interest rates on the SBPUs would discourage the
\nrush for the dollar as people would have higher returns when
\ninvesting money in rupiah, said the analysts.<\/p>\n
Normal<\/p>\n
The money market returned to normal yesterday, with the rupiah
\nbouncing back to its pre-rush level of 2,215 on the spot market,
\na foreign exchange dealer said.<\/p>\n
\"Foreign exchange trading was quiet and no more signs of a
\nrush were seen,\" said the dealer.<\/p>\n
The rupiah, which fell to its lowest level of 2,185 against
\nthe dollar on Thursday, inched up to close at 2,219 on Friday
\nfollowing the central bank's massive market intervention and
\nstrong statements by the minister of finance and the Bank
\nIndonesia governor.<\/p>\n
The central bank auctioned at least $500 million for three-
\nmonth forward transactions last week with higher premium rates in
\na bid to stabilize the volatile rupiah.<\/p>\n
The central bank, usually closed on Saturdays, opened for
\nforeign exchange clearing last Saturday to curb a possible
\nmounting of the rush in money changers. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/no-rupiah-devaluation-soeharto-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}