Rupiah fairly valued: Goldman Sachs<\/p>\n
NEW YORK (Reuter): Despite concerns over political stability
\nand President Soeharto's health, the Indonesian currency has
\nadhered to its fair value, Goldman Sachs said in its "Weekly
\nAnalyst" on Tuesday.<\/p>\n
According to the Goldman Sachs model, a long-run equilibrium
\nvalue for the rupiah is 2,395 per U.S. dollar for the average of
\nAugust 1996, compared to the average spot rate of 2,332 per
\ndollar.<\/p>\n
The Indonesian economy in 1995 grew faster than any year since
\n1991, to which the government responded with tighter
\nmacroeconomic policies to prevent overheating.<\/p>\n
Slower exports would lead to marginally wider current account
\ndeficits about 3.9 percent of the GDP in 1996 before retreating
\nin 1997.<\/p>\n
"We do not see a change in Indonesia's policy of steady
\ndepreciation of the rupiah at 4.5 - 5.0 percent, which is
\nconsidered consistent with a steady real exchange rate," it says.<\/p>\n
Despite political uncertainty economic fundamentals are
\nimproving with slowing inflation and a manageable trade
\nimbalance. The central bank will therefore attempt to keep
\ninterest rates up in coming months to slow the economy,<\/p>\n
"We believe limited pressure on the currency due to political
\nfall-out is likely to be met with higher interest rates rather
\nthan devaluation," it says<\/p>\n
The rupiah is forecast to be at 2,354, 2,372, 2,400 and 2,456
\nper dollar at one-, three-, six- and 12-month horizon, in line
\nwith the corresponding forwards.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-fairly-valued-goldman-sachs-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}