Rupiah not affected by dollar plunge: Analysts<\/p>\n
JAKARTA (JP): Although the U.S. dollar fell against the
\nJapanese yen to reach another post-war record low yesterday,
\nanalysts said the rupiah was holding firm and that monetary
\ninstability was unlikely in the near future.<\/p>\n
\"There should not be any reason for panic in the immediate
\nfuture about the rupiah and other regional currencies,\" James
\nCastle, president of investment consulting firm Business Advisory
\nIndonesia, told The Jakarta Post yesterday.<\/p>\n
\"This is because the fall of the dollar against the yen was
\nperceived as something that came out of developed economies
\nrather than the emerging markets,\" he said.<\/p>\n
The dollar reached a new global low yesterday, hitting 80.15
\nyen on the Tokyo foreign exchange market, despite greenback-
\nsupporting market intervention by the Bank of Japan.<\/p>\n
It was quoted at 82.92-82.97 yen in afternoon trading, against
\n83.89-83.92 yen on the previous trading day in Japan and 83.68
\nyen quoted in New York late Friday.<\/p>\n
Market developments here and in Singapore proved Castle right
\nas the rupiah held steady at closing despite some selling during
\nthe day.<\/p>\n
The U.S. greenback was quoted at Rp 2,231 at closing
\nyesterday, unchanged from Friday, although it started the day at
\naround Rp 2,233.<\/p>\n
After a brief episode of dollar rush in the rupiah market in
\nJanuary following the Mexican financial crisis, Minister of
\nFinance Mar'ie Muhammad said that the depreciation of the rupiah
\nagainst the greenback would be limited to between three percent
\nand four percent.<\/p>\n
According to Bank Indonesia, the dollar appreciated to Rp
\n2,221 yesterday from Rp 2,191 on Jan. 2, while the yen rose to Rp
\n26.80 from Rp 22.10.<\/p>\n
Tolerable<\/p>\n
A foreign investment banker told the Post yesterday that all
\nthe sales of rupiah yesterday were still within the tolerable
\nlimit set by Bank Indonesia, which usually intervenes when the
\nspot market of the local currency nears the official exchange
\nrate.<\/p>\n
\"Nothing to worry in the immediate future. The concern should
\nbe a little further in the future, regarding Indonesia's debt
\npayments,\" he said.<\/p>\n
Although Indonesia has never once rescheduled its debts since
\n1967, some analysts have expressed concern about the rising yen
\nbecause, they say, every time the yen goes up by one percent
\nagainst the dollar, it adds $300 million or more to Indonesia's
\ndebts outstanding.<\/p>\n
According to official figures, Indonesia's foreign debts, a
\nmajority of which are long-term government loans, totaled around
\n$88 billion. About 40 percent of those loans are denominated in
\nyen, with annual interest rates of between two-and-a-half and
\nthree percent.<\/p>\n
About 15 percent of the country's 1995\/1996 budget, effective
\nas of April 1, is financed by foreign development loans.<\/p>\n
Analysts estimate that Indonesia's current account deficit may
\nreach $3.6 billion during this financial year and that its debt-
\nservice ratio may reach 31 percent.<\/p>\n
Doubt<\/p>\n
According to a report last week by U.S.-based merchant bank
\nJ.P. Morgan, foreign managers' doubt about Indonesia's ability to
\nhonor its debts was the cause of the rupiah's depreciation on the
\nspot market last month.<\/p>\n
\"Last Friday (Friday March 31 and the end of the 1994\/1995
\nfiscal year), the rupiah dropped to 2,238\/US$, returning the
\ndepreciation rate back to 3.8 percent -- exactly the rate seen
\nduring the height of January's 'tequila fever',\" the report said.<\/p>\n
It also said: \"This year, seemingly, investors have come to
\nworry about a perceived increase in Indonesia's external debt
\nburden brought about by the rising yen.\"<\/p>\n
Castle, however, played down the likelihood of another
\nmisperception of Indonesia's fiscal strength on the part of
\nforeign fund managers.<\/p>\n
\"Look, Indonesia has a good credit history and the government
\nhas repeatedly stressed that it will maintain its prudent fiscal
\npolicy,\" he said.<\/p>\n
He also pointed out that, besides rosy projections of overall
\neconomic growth and an increasing influx of foreign capital, the
\ncountry's foreign exchange reserves had increased last month.<\/p>\n
Figures from Bank Indonesia show that, as of last month,
\nforeign exchange reserves had risen to $13.23 billion from
\nFebruary's level of $12.70 billion. (hdj)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-not-affected-by-dollar-plunge-analysts-1447893297",
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