Rupiah down to 10,000 after U.S attack<\/p>\n
Berni K Moestafa
\nThe Jakarta Post
\nJakarta<\/p>\n
News of the U.S. attack against Afghanistan has crushed the
\nrupiah's timid recovery, as market players fled to the dollar
\nover fear of a backlash by radical groups protesting the strike.<\/p>\n
Dollar hunters stormed the market on Monday trading, driving
\nthe rupiah beyond the 10,000 level against the U.S. dollar.<\/p>\n
Bank Indonesia was seen coming to the rupiah's defense, which
\nhelped pulled down the unit from its intra-day low of 10,500.<\/p>\n
By day's end, the rupiah closed down at 10,163 from Friday's
\nclosing at 9,825.<\/p>\n
Analysts warned of further losses to the rupiah, if protests
\nagainst the U.S. turn violent or drag on for too long.<\/p>\n
Several hundred anti-U.S. protesters took to the streets of
\nJakarta in reaction to the overnight attack against Afghanistan.<\/p>\n
Earlier, some local radical organizations had threatened to
\nexpel American citizens and attack the country's interests here,
\nshould the U.S. launch its military offensive.<\/p>\n
Although the protests have so far been relatively peaceful,
\nforeign investors remain wary of a reprisal against their assets
\nby these groups.<\/p>\n
The government has warned against such moves and at the same
\ntime assured investors of the safety of their businesses.<\/p>\n
Last week, the rupiah took some reprieve from the fact that no
\nviolence had erupted because of the protests.<\/p>\n
But the government now thinks that much of the rupiah's fate
\nhinges on developments outside.<\/p>\n
Coordinating Minister for the Economy, Dorodjatun Kuntjoro-
\nJakti said it was difficult to predict the rupiah's direction in
\nthe wake of the military strikes.<\/p>\n
\"It's hard to monitor the developments, as they are largely
\ndriven by a wave of speculation worldwide,\" he told reporters on
\nthe sidelines of a trade seminar.<\/p>\n
Dorodjatun said market players turned to the U.S. dollar in a
\nreaction he called \"flight to quality\".<\/p>\n
At this moment, he continued, the global currency market was
\nspeculating on how long the war would last.<\/p>\n
He said the wager was whether the United States could end the
\nwar before the Muslim fasting season begins in mid November.<\/p>\n
Experts have warned that a prolonged war could undermine the
\nfragile support of Muslim countries for the U.S. war campaign.<\/p>\n
\"Most players pegged exchanges rates to that period (mid
\nNovember),\" he said.<\/p>\n
He said it would take about a week to assess whether the
\nrupiah's drop reflected a downward trend or the market's short-
\nterm reaction.<\/p>\n
Finance Minister Boediono said in this situation, intervention
\ninto the money market and hiking interest rates were ineffective.<\/p>\n
\"The best we can do is to maintain stability ... don't let
\noutside developments affect domestic stability,\" he said.<\/p>\n
But Bank Indonesia Governor Sjahril Sabirin vowed to continue
\nto intervene, arguing foreign exchange reserves were adequate.<\/p>\n
\"Intervention will be done if we think it's helpful and
\nnecessary,\" Sjahril said.<\/p>\n
He added there was no need to raise interest rates just yet.<\/p>\n
On the stock market, the index has entered its fifth week of
\ndecline since last month's terrorist attack against the U.S.<\/p>\n
Growing security concerns following the U.S. retaliation
\nshoved the stock index up to 367.07 points from its Friday
\nclosing at 381.59.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-down-to-10000-after-us-attack-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}