Rupiah hits another low but recovers<\/p>\n
JAKARTA (JP): Despite Indonesia's strong economic
\nfundamentals, speculators made more concerted attacks on the
\nrupiah yesterday, pushing it to a record low and prompting the
\ncentral bank to intervene to defend the currency.<\/p>\n
Dealers said spot rupiah against the U.S. dollar dipped to a
\nhistoric low of 2,650\/55 yesterday morning from a 2,510\/20 open
\nbefore easing to 2,636\/41 at 6:00 p.m. local time.<\/p>\n
Following the plunge in rupiah, Jakarta share prices closed
\n1.6 percent lower yesterday on a broad based sell-off. The
\nJakarta Stock Exchange composite index fell 11.59 points to
\n712.40.<\/p>\n
Bank Indonesia's Governor Soedradjad Djiwandono called on the
\npeople yesterday not to panic about the steep fall in the
\nrupiah's exchange rate and not to join the rush to the American
\ndollar.<\/p>\n
"The people's purchasing power is not measured by the rupiah
\nappreciation but by the inflation rate," Soedradjad told newsmen
\nyesterday after attending the meeting of the Bankers Club
\nIndonesia.<\/p>\n
Dealers said the rupiah became the target of speculators
\nyesterday after being spared previously when they focused on
\nother regional currencies.<\/p>\n
"They are trying to force the central bank to float the rupiah
\nor at least widen the intervention band because they have been
\nlong on dollar and short on rupiah," a dealer with a local
\nforeign exchange bank said.<\/p>\n
"If they could force the Thai baht and the Philippines peso to
\ndevalue by more than 15 percent, why not the rupiah?" he asked.<\/p>\n
Bank Indonesia on July 11 widened the dollar-rupiah
\nintervention band, in which the rupiah can float before the
\ncentral bank intervenes, to 12 percent from 8 percent, to avert
\nspeculative attacks.<\/p>\n
Speculative attacks on the rupiah escalated early last week
\nfollowing the de facto devaluation of the Thai baht earlier this
\nmonth and the Philippine peso on July 11.<\/p>\n
A dealer of another foreign exchange bank predicted that the
\nattacks on the rupiah would continue until Bank Indonesia, the
\ncentral bank, or the speculators controlled the situation and
\nmade profits.<\/p>\n
He said Bank Indonesia yesterday intervened in the market with
\nsome US$500 million through four or five brokers.<\/p>\n
The central bank's intervention at midday stopped the rupiah
\nfrom further dipping in afternoon trading.<\/p>\n
An executive at publicly listed Bank Bira, Parveen Gandhi,
\npredicted that speculative attacks on the rupiah would ease by
\nnext week and the rupiah would recover to below the 2,600 level.<\/p>\n
"When I attended the Asian Debt Conference in Hong Kong last
\nweek, everyone I met there said the rupiah would survive the
\nattacks as Indonesia's economy was in better shape compared to
\nthose of Thailand and the Philippines," Gandhi said.<\/p>\n
President of the Manila-based Asian Development Bank Mitsuo
\nSato agreed and said that Indonesia should be eventually free
\nfrom such speculative attacks considering its sound macroeconomic
\nfundamentals.<\/p>\n
"Of course, you are not entirely free from such attacks, but
\nyou are much better situated compared to other countries which
\nhad to devalue their currencies, including Thailand and the
\nPhilippines," Sato told journalists here yesterday.<\/p>\n
"You are prudent enough to make exchange rate movement more
\nflexible. That's very effective in coping with this question of
\ncurrency attacks," added Sato who is here for a few days of
\nvisit.<\/p>\n
Indonesia has less problems in its banking sector compared to
\nother countries, he said.<\/p>\n
Yesterday Sato met with Minister of Finance Mar'ie Muhammad,
\nBank Indonesia Governor J. Soedradjad Djiwandono and Coordinating
\nMinister for Economy and Finance Saleh Afiff. He is scheduled to
\nmeet President Soeharto today.<\/p>\n
Chairman of the Indonesian Issuers Association Rosano Barack
\ncalled on local stock market players not to panic in reading the
\ncurrent development.<\/p>\n
"They (speculators) are just bluffing. If we panic and buy
\ndollars, then they will win... Let them buy dollars, but don't
\nfollow by buying dollars. Sooner or later they will get lost,"
\nRosano said.<\/p>\n
Speculators attacked the rupiah after they failed to attack
\nthe Indonesian stock market, Rosano said.<\/p>\n
He said yesterday's drop in Jakarta stock market was caused
\nmainly by the panic selling by retail investors who had little
\ninformation on speculative attacks on the rupiah.<\/p>\n
"That's only temporary, it will soon recover," Rosano said.<\/p>\n
An analyst at Schroders Indonesia Securities John Rachmat
\nagreed, saying the stock market was overreactive to the rupiah's
\nplunging value.<\/p>\n
He said foreign investors dumped stocks of companies which had
\nlarge dollar-denominated debts. (alo\/rid)<\/p>\n
Editorial -- Page 4<\/p>\n
Photo -- Page 10<\/p>\n
Growth -- Page 11<\/p>\n
Soedradjad -- Page 12<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-hits-another-low-but-recovers-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }