Rizal blames politics on rupiah's fall<\/p>\n
JAKARTA (JP): Coordinating Minister for the Economy Rizal
\nRamli said on Thursday the weakening of the rupiah against the
\nU.S. dollar was in part the result of domestic political
\nconcerns.<\/p>\n
Rizal said the fair value of the rupiah was at about Rp 8,000
\nper dollar.<\/p>\n
\"It (the weakening of the rupiah) is because of the political
\nsituation,\" he said.<\/p>\n
Rizal's comments failed to improve the sentiment on the
\ncurrency.<\/p>\n
The rupiah fell to Rp 9,010 against the dollar late on
\nThursday, its lowest level since July. The currency closed at
\nRp 8,950 to the dollar on Tuesday, with the onshore market closed
\non Wednesday for a public holiday.<\/p>\n
Asked whether the government would take action to help prop up
\nthe ailing currency, he said any intervention would depend on
\nBank Indonesia, the country's independent central bank.<\/p>\n
He added that prospects for the strengthening of the rupiah
\ndepended on developments on the political front.<\/p>\n
Political opponents of President Abdurrahman Wahid have
\nincreased their pressure in what many see as an attempt to oust
\nthe country's first democratically elected President.<\/p>\n
Abdurrahman also has been under attack over financial scandals
\nallegedly involving people close to him.<\/p>\n
Also, social unrest and riots continue to plague several areas
\nof the country.<\/p>\n
Meanwhile, dealers said the rupiah's weakening also was
\nattributable to weakness in the Philippine peso, which fell on
\nThursday amid pressure for President Joseph Estrada to step down
\nover corruption allegations.<\/p>\n
Bank Indonesia deputy governor Achjar Iljas said earlier the
\ncentral bank would continue to help limit the pressure on the
\nrupiah by controlling the growth of base money.<\/p>\n
\"Bank Indonesia has set a certain target growth for base
\nmoney. But in practice, this is not always easy to implement,\" he
\nsaid.<\/p>\n
He did not say whether the central bank would take more
\ndrastic measures to lift the rupiah.<\/p>\n
Achjar said the current weakening of the rupiah was related to
\nthe increasing risk premium on Indonesia, as the domestic
\npolitical situation remained unstable.<\/p>\n
He added that dollar demand for debt repayments was also a
\nfactor behind the rupiah's continued fall.<\/p>\n
Bank Indonesia said recently private sector foreign debt
\nfalling due in the fourth quarter of this year amounted to more
\nthan US$9.2 billion.<\/p>\n
A stronger rupiah is a cornerstone of the country's economic
\nrecovery. The government has assumed an exchange rate of Rp 7,300
\nper dollar and an economic growth rate of 4.5 percent in the 2001
\nState Budget.<\/p>\n
The rupiah has hovered between Rp 8,500 and Rp 8,900 per
\ndollar over the last several months.<\/p>\n
The recent success in convincing international donors grouped
\nin the Consultative Group on Indonesia to provide the country
\nsome $4.8 billion in loans to help plug the 2001 budget deficit
\nfailed to lift the rupiah, as the news was overshadowed by
\npolitical concerns.<\/p>\n
Standard & Poor's recent decision to upgrade Indonesia's
\nrating also failed to lift sentiment on the rupiah. (rei)<\/p>",
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