Rupiah hits four-year low against dollar<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The rupiah continued its crumble against the U.S. dollar on
\nMonday, dragging the stock market along with it, as oil prices
\nshot above $70 a barrel and the government still showed no signs
\nof taking any decisive action to support the nation's currency.<\/p>\n
The rupiah fell for the tenth consecutive day on Monday,
\nclosing down by 4.2 percent to Rp 10,840 against the dollar, its
\nlowest rate since November 2001.<\/p>\n
The rupiah's plunge started from the day's opening session,
\nimmediately dropping to Rp 10,450 a dollar, compared to Friday's
\nclose of Rp 10,400.<\/p>\n
Indonesian share prices were dealt a severe blow from the
\nsituation, as investors released stocks that were considered
\nprone to a weakening rupiah, pushing the Jakarta Stock Exchange
\nComposite Index down 5.16 percent to a year low of 994.770.<\/p>\n
Panic selling was evident during the day's trading, with the
\ndrop occurring almost across the bourse, including stocks of
\ncompanies that would benefit from higher oil prices -- signaling
\ndeteriorating investor confidence.<\/p>\n
Rising oil prices affected the rupiah as state oil and gas
\nfirm PT Pertamina having to pay more for its oil imports.<\/p>\n
Sweet crude oil for October delivery in New York shot up
\nUS$4.67 to $70.80 a barrel. In London, Brent oil price also shot
\nabove $70 per barrel, although it then eased down to $69.32.<\/p>\n
The soaring oil prices were due to Hurricane Katrina that
\nforced energy companies in the Gulf of Mexico to evacuate rigs.<\/p>\n
Further pressure on the rupiah has come from local companies
\nwho are in constant need of dollars to finance their large import
\ncomponents and to service their foreign debts.<\/p>\n
The government was still upbeat that the situation was
\n\"manageable\" and was dragging its feet in making the decision to
\ncut fuel subsidies by raising domestic fuel prices, concerned by
\nthe adverse political consequences it could bring.<\/p>\n
The central bank itself was considered slow in implementing
\nthe needed monetary policies to help the rupiah, especially in
\nraising interest rates to absorb excess liquidity and tightening
\nthe market from speculative trading.<\/p>\n
Bank Indonesia (BI) Governor Burhanuddin Abdullah said on
\nMonday that the central bank would raise interest rates soon, but
\nin a careful manner, declining to provide details.<\/p>\n
\"The interest rate hike will be conducted carefully as to not
\naffect the economy,\" he said. \"All our monetary policies to cope
\nwith the situation will be taken in a market-friendly manner.\"<\/p>\n
Concerning plans requiring local companies to repatriate
\ntheir dollar export revenues, Burhanuddin brushed aside the
\nfeasibility of implementing such a plan.<\/p>\n
He said from the country's $65 billion in export revenues,
\nsome $55 billion has already been repatriated, while the
\nremainder was still parked abroad.<\/p>\n
But there was still a slight positive signal with BI Deputy
\nGovernor Hartadi Sarwono saying that Indonesia would double its
\ncurrent bilateral swap arrangement with Japan to $6 billion to
\nstrengthen the country's foreign exchange reserves.<\/p>\n
\"The funds will function as a standby reserve,\" he said. The
\ngovernment also plans to double its bilateral swap arrangements
\nwith China and Korea, currently standing at $1 billion each.<\/p>\n
At present, Indonesia's forex reserve stands at $32 billion.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-hits-four-year-low-against-dollar-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }