Rupiah hits 11-month high at 8,605<\/p>\n
JAKARTA (JP): The newly installed government continued to keep
\nmarket players under its spell as the rupiah broke, for the first
\ntime this year, the 9,000 level on Monday, ending at an 11-month
\nhigh over confidence in President Megawati Soekarnoputri's
\nCabinet, analysts said.<\/p>\n
The local unit ended Monday trading at 8,605 against the U.S.
\ndollar, surging from its previous close of 9,100.<\/p>\n
SG Securities Pte. Ltd. research director Lin Che Wei said
\ngrowing international support, especially from the United States,
\nhad instilled confidence in the money market.<\/p>\n
\"We're seeing an improved relationship with the United States
\nthat goes beyond anyone's expectation,\" Che Wei told The Jakarta
\nPost.<\/p>\n
Last Saturday, visiting U.S. Trade Representative Robert B.
\nZoellick met President Megawati, reiterating support of the
\nworld's largest economy for the new government.<\/p>\n
Zoellick brought with him an invitation from U.S President
\nGeorge W. Bush for Megawati to go to Washington.<\/p>\n
The next day, Australian Prime Minister John Howard became the
\nfirst foreign head of government to meet Indonesia's new
\nPresident.<\/p>\n
Che Wei said with that much attention, the market expected
\nIndonesia's economic recovery to accelerate.<\/p>\n
Analysts said Indonesia was close to securing a deal with the
\nInternational Monetary Fund that would help entice the inflow of
\nmuch-needed foreign investment.<\/p>\n
Another reason for the rupiah's surge, Che Wei continued, was
\nthe market's belief of a government determination to meet this
\nyear's budget targets.<\/p>\n
That implied keeping the average exchange rate at 9,600, as
\nstipulated in the 2001 state budget, he said.<\/p>\n
\"But from last January to Megawati's rise to the presidency in
\nJuly, the rupiah hovered at around 10,500,\" he said.<\/p>\n
To meet the budget target, he went on, the government had to
\nkeep the rupiah at around 8,400 throughout the rest of the year.<\/p>\n
That job would fall largely to the central bank through its
\nmonetary policies, he said.<\/p>\n
Given current market optimism, Bank Indonesia should be more
\nwilling now to intervene, he said.<\/p>\n
\"It (Bank Indonesia) thinks if it doesn't intervene now, it
\nwill lose momentum and intervention will become more expensive,\"
\nChe Wei said.<\/p>\n
According to him, Bank Indonesia has already been seen
\nintervening in the past few days.<\/p>\n
Market players, he said, were reluctant to go against the
\nflow, knowing they would face Bank Indonesia.<\/p>\n
\"The question is, at what level will the rupiah stabilize?\"
\nChe Wei said.<\/p>\n
Bank Indonesia deputy governor Miranda Goeltom estimated the
\nrupiah would continue strengthening in the near future.<\/p>\n
According to her, the local unit could stabilize at between
\n8,000 to 9,000.<\/p>\n
Che Wei said further that figures like Coordinating Minister
\nfor the Economy Dorodjatun Kuntjoro-Jakti and Finance Minister
\nBoediono were likely to rule the budget with strict discipline.<\/p>\n
\"The market sees them as ministers who would go ahead even
\nwith unpopular measures for the sake of the budget,\" he said.<\/p>\n
Among those measures have been raising the tax base, hiking
\nfuel prices to cut subsidies, and pressing ahead with
\nprivatization, despite hurting nationalistic sentiment.(bkm)<\/p>",
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