Rupiah falls to lowest level in two years<\/p>\n
JAKARTA (JP): The rupiah dropped on Monday by 2 percent to its
\nlowest level since October 1998 amid worsening ethnic violence in
\nCentral Kalimantan and problems with the International Monetary
\nFund.<\/p>\n
The rupiah ended at Rp 9,830 per U.S. dollar late on Monday
\nfrom Rp 9,685 on Friday, foreign exchange dealers said.<\/p>\n
Bank Indonesia senior deputy governor Anwar Nasution pledged
\nthat the central bank would intervene in the market to help
\nprevent the local unit from exceeding the Rp 10,000 level.<\/p>\n
\"We will continue to intervene in the market but we should
\nalso address the main problems, the unrest and political
\nproblems,\" Anwar was quoted as saying by Reuters. \"Of course we
\nhope we can stabilize the rupiah below 10,000.\"<\/p>\n
Around 270 people have been killed in ethnic violence in
\nSampit, Central Kalimantan. The week-long violence has added
\njitters to a financial market already edgy by reports of
\nworsening relations between Indonesia and the IMF.<\/p>\n
Dealers said that the drop in the local currency was also
\ndriven by strong corporate demand on dollars to repay overseas
\ndebt.<\/p>\n
Dow Jones news wires quoted dealers as saying that genuine
\ncorporate demand early in the day emerged around Rp 9,725 to Rp
\n9,775, prompting other participants to cover their short dollar
\npositions. This triggered stop-loss dollar buying around Rp
\n9,800, which pushed the dollar to as high as Rp 9,865, they
\nadded.<\/p>\n
The rupiah had dropped to as low as Rp 9,865 earlier on
\nMonday, but found temporary respite when state banks sold
\ndollars, probably on behalf of the central bank, and as
\ncommercial banks locked in profits, dealers said.<\/p>\n
Dealers also said that the market was nervously awaiting for
\nthe result of last week's high-level talks between Coordinating
\nMinister for the Economy Rizal Ramli and the IMF in Washington.<\/p>\n
Relations between the government and the IMF had dropped to
\nits lowest level after the Fund delayed the disbursement of its
\nnext US$400 million loan installment to Indonesia. The delay was
\nmade due to concerns over several issues including the
\ngovernment-proposed amendment to the central bank law, a poorly-
\ndesigned fiscal decentralization policy, and delay in the sale of
\ngovernment ownership in Bank Central Asia and Bank Niaga.<\/p>\n
The disbursement of the IMF money is seen as a key factor to
\nhelp maintain investor confidence in the economy, and to open the
\nway for other multilateral donors to provide their assistance to
\nIndonesia.<\/p>\n
Rizal said in a press conference late on Monday that the
\ngovernment and the IMF had reached an \"agreement\" over the
\ndifficult issue of the central bank law amendment, paving the way
\nfor the Fund to proceed with the review of the country's economic
\nreform program and the disbursement of its loan.<\/p>\n
The rupiah had been relatively steady in the past month
\ndespite increasing political uncertainty triggered by the
\nlegislature's censure of President Abdurrahman Wahid over alleged
\ninvolvement in two financial scandals. The censure could lead to
\na process of impeachment.<\/p>\n
The new foreign exchange ruling introduced by Bank Indonesia
\nin the middle of January helped to maintain the stability of the
\nlocal currency.<\/p>\n
The new forex ruling basically bans rupiah transfers to
\nnonresidents and cuts down the limit of forward transactions
\nbetween onshore banks and nonresidents from Rp 5 million to Rp 3
\nmillion in a bid to help curb speculation against the rupiah.<\/p>\n
But experts said that the restrictions had only served to slow
\ndown the rupiah's descent - and not halt it - as onshore dollar
\ndemand remains strong, and domestic economic and political
\nproblems persisted. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-falls-to-lowest-level-in-two-years-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}