Rupiah down as support wanes<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The rupiah ended its three-day advance against the U.S. dollar,
\nas central bank support appeared to run out of steam with the
\ngovernment yet to unveil more concrete fiscal policies to help
\nstrengthen the nation's recently beleaguered currency.<\/p>\n
The rupiah began slipping again against the greenback, closing
\ndown by a slight 0.93 percent at Rp 10,320 on Monday, as compared
\nto its Rp 10,225 closing last Thursday.<\/p>\n
Monday's fall came as several Asian currencies gained on the
\ndollar on the back of the greenback's recent weakening against
\nthe euro and the Japanese yen as the impact of Hurricane Katrina
\ncast doubt on U.S. economic prospects.<\/p>\n
The Jakarta Stock Exchange Composite Index also closed down by
\n0.32 percent at 1,035.89 points, though pressure on share prices
\nappeared not to be a spillover from negative sentiment against
\nthe rupiah, but more to do with the recent revision by global
\nrating agency Standard and Poor's (S&P) of its Indonesian credit
\nratings.<\/p>\n
S&P affirmed last week Indonesia's B+ long-term foreign
\ncurrency and BB long-term local currency sovereign credit
\nratings, but revised their outlooks from positive to stable. On
\nMonday, S&P also cut its rating outlooks for Bank Mandiri, Bank
\nNegara Indonesia, Bank Danamon, Telkom and Indosat to stable from
\npositive.<\/p>\n
Indonesian financial markets were closed on Friday due to a
\nnational holiday.<\/p>\n
The rupiah suffered a ten-day slide against the greenback late
\nlast month, tumbling to a four-year low, and narrowly escaping Rp
\n12,000 per dollar, as record-high oil prices jeopardized the
\ncountry's fiscal stability and shook market confidence in the
\ncurrency.<\/p>\n
The rupiah only managed to make a rebound after Bank Indonesia
\n(BI) came to the rescue with a six-point monetary policy package
\nlast week, which included effectively hiking its benchmark BI
\nRate to 9.5 percent, raising its one-week overnight rate to 8.5
\npercent, and increasing the minimum reserves that commercial
\nbanks are required to deposit with the central bank to 5 percent.<\/p>\n
On Monday, the central bank continued its all-out efforts to
\nhelp the ailing rupiah, hiking its overnight rate to 13.52
\npercent -- from the previous 10.82 percent -- and offering its
\nFine Tune Kontraksi deposits -- to absorb a total of Rp 17.05
\ntrillion (some US$1.7 billion) in excess market liquidity.<\/p>\n
The rate hike could prove helpful for the rupiah as it will
\nfurther encourage banks to fulfill the new minimum reserve
\nrequirement, which will come into effect on Tuesday.<\/p>\n
Earlier in the day, Minister of Energy and Mineral Resources
\nPurnomo Yusginatoro reaffirmed during a hearing with the House
\nthat the government planned to gradually hike domestic oil-based
\nfuel prices -- including kerosene, which is used by many of the
\ncountry's low-income families -- until they reached market levels
\nby 2007.<\/p>\n
Calls to hike fuel prices to cut budget-burdening fuel
\nsubsidies have recently surfaced as a solution to help the
\nrupiah.<\/p>\n
Doing so is, however, a political sensitive decision for the
\ngovernment, whose last fuel price hike in March sparked
\nwidespread protests and pushed the inflation rate up to 8.81
\npercent.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-down-as-support-wanes-1447893297",
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"sponsor": "Okusi Associates",
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