Rupiah fall only temporary: Govt<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The rupiah fell to a 19-month low on Tuesday as economic and
\npolitical uncertainties created jitters among companies, which
\nlately have been heavy buyers of dollars.<\/p>\n
But Minister of Finance Boediono said the rupiah's fall was
\nonly temporary as the large current account deficit in the U.S.
\nwould eventually push the American greenback lower.<\/p>\n
"In my opinion, this is only a short-lived trend. In fact, in
\nthe medium-term, the dollar will weaken," he said.<\/p>\n
He added that as part of efforts to help stabilize the local
\nunit, the government would dispose of its dollar-based assets. He
\ndid not provide details, but a Ministry of Finance official said
\nthat part of the government's tax revenue was in dollar notes.<\/p>\n
The rupiah closed at Rp 9,260 against the dollar on Tuesday,
\nlower than Monday's close of Rp 9,125. The local unit plunged to
\nas low as Rp 9,345 during the day, but dealers said that
\nintervention by the central bank helped to prevent the rupiah
\nfrom a deeper plunge.<\/p>\n
They added that expectation of a hike in U.S. interest rate
\nlater next month, soaring oil prices, and domestic political
\nuncertainty ahead of the July 5 presidential election had
\nprompted local corporations to purchase dollars as they feared
\nthe local unit might fall further. The companies need the hard
\ncurrency to repay maturing overseas debts and finance the import
\nof raw materials.<\/p>\n
Expectations the U.S. Federal Reserve will hike interest rates
\nfrom their 46-year low have prompted investors to switch their
\ninvestment to dollar-based assets, which, in the case of
\nIndonesia, harmed the rupiah.<\/p>\n
But remarks from Boediono suggest that the fall in the rupiah,
\nwhich has been the worst-performing currency in the Asia region
\nso far this year, is not a sign of the reemergence of the late
\n1990s currency crisis, given particularly the country's stronger
\nforeign exchange reserves, and more stable macroeconomic
\nconditions.<\/p>\n
Nevertheless, the fall in the local unit, especially as the
\ncentral bank seems to be unable to stem its decline, has created
\nfears of inflationary pressures at home, and might force the
\ncentral bank to start pushing domestic interest rates higher,
\nboth of which could harm the overall economic recovery process.<\/p>\n
Meanwhile, the fall in the local unit contributed to a 2.1
\npercent decline in the Jakarta Stock Composite Index to 717.13
\npoints on Tuesday. The index has fallen 12 percent since its
\nApril 27 high.<\/p>\n
Falls in many Asian stock markets also affected the local
\nmarket.<\/p>\n
But traders said that late bargain-hunting in select blue
\nchips lifted the index from its intraday low. Decliners led
\ngainers 101 to 25, with 37 stocks unchanged. Volume was 1.1
\nbillion shares valued at Rp 764 billion.<\/p>\n
Bellwether PT Telkom lost Rp 350, or 4.6 percent, to Rp 7,250
\non profit-taking, and after its American Depositary Receipts fell
\n0.5 percent to US$16.86 on Monday.<\/p>\n
Select banking blue chips ended lower on renewed worries that
\nthe central bank may increase interest rates to prevent the
\nrupiah from falling further.<\/p>\n
Oil producer Medco Energi International ended up Rp 25, or 1.9
\npercent, at Rp 1,375 amid reports that independent directors at
\nAustralia's Novus Petroleum Ltd. recommended that Novus
\nshareholders accept the revised Medco takeover offer.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-fall-only-temporary-govt-1447893297",
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"sponsor": "Okusi Associates",
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