Rising yen could affect growth, analysts warn<\/p>\n
JAKARTA (JP): Domestic and foreign analysts warned yesterday
\nthat the steady appreciation of the Japanese yen against the U.S.
\ndollar might adversely affect Indonesia's economic growth.<\/p>\n
\"A prolonged fall of the dollar (against the yen), especially
\nif it lasts several months, will squeeze our economy as the debt
\nburden will increase and the government sector will be forced to
\ncontract public spending,\" Pande R. Silalahi, an economist at the
\nCenter for Strategic and International Studies (CSIS), told The
\nJakarta Post yesterday.<\/p>\n
Indonesia, which has not rescheduled its loans since 1967, is
\na major borrower of yen in the region.<\/p>\n
According to the Ministry of Finance, Indonesia's foreign
\ndebts stood at US$87.6 billion last December, including $58.6
\nbillion owed by the government and $29 billion by private and
\nstate-owned companies. About 40 percent of the debt was
\ndenominated in yen.<\/p>\n
Some analysts believe that every time the yen goes up by one
\npercent against the dollar, it adds at least $300 million to
\nIndonesia's debts outstanding.<\/p>\n
Economists estimate that Indonesia's current account deficit
\nmay reach $3.6 billion during this fiscal year and that its debt-
\nservice ratio may reach 31 percent.<\/p>\n
Market<\/p>\n
The dollar recovered to 83.55 yen on the Japanese market
\nyesterday after hitting a new global low of 80.15 yen on Monday
\nmorning.<\/p>\n
Some Tokyo currency dealers said yesterday the dollar could
\nhave reached a temporary bottom on Monday, but warned it was
\nstill far too early to say that the yen's rise had been reversed.<\/p>\n
The Antara Financial Economic and Commodity service reported
\nyesterday afternoon that the rupiah rebounded against the dollar
\nand reached Rp 2,229.50 and Rp 2,230.50 from Rp 2,231,25 and
\n2,232.25 on Monday.<\/p>\n
Dealers said that the rupiah's rebound was caused by the
\ncentral bank's 'market checking', although all current movements
\nof the local currency are still within the band range set by the
\ngovernment.<\/p>\n
Local and regional dealers, however, had mixed opinions on
\nwhether the dollar's rebound against the yen was temporary.<\/p>\n
A local economist, Didik J. Rachbini, said yesterday that a
\nlingering high yen will certainly squeeze the government's
\nresources, which in turn will affect the economic growth as the
\nstate sector still plays a significant role in the economy.<\/p>\n
\"The government should check all possible options, including
\ndiplomatic lobbying of the Japanese government, about the rising
\nyen because the debt burden will soon become really heavy,\" said
\nDidik, who wrote a book on Indonesia's foreign debt.<\/p>\n
\"Maybe Indonesia should form a joint lobbying effort with
\nother big yen debtors such as the Philippines and Thailand,\" he
\nsaid.<\/p>\n
The Japanese authorities, however, stated that they had no
\nremedy for the extra burden caused by the rising yen.<\/p>\n
The Singapore-based Business Times yesterday quoted an
\neconomist from investment house Merrill Lynch as saying that \"the
\nproportion of long-term external debt denominated in yen is
\nparticularly worrisome for Indonesia, the Philippines and
\nThailand.\" (hdj)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rising-yen-could-affect-growth-analysts-warn-1447893297",
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