Rupiah remains under pressure, closes at 9,855<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The rupiah continued to lose ground against the U.S. dollar for
\nthe sixth consecutive trading day on Monday, dropping to near the
\nRp 9,900 level amid continuing high local demand for the
\nstrengthening American greenback.<\/p>\n
The rupiah closed at Rp 9,855 a dollar, down from Rp 9,770 at
\nlast Friday's close. This was the local unit's lowest level for
\nthe past two months.<\/p>\n
The rupiah's losses in turn put the country's stock market
\nunder pressure, although the index managed to hold its ground,
\nwith the Jakarta Composite Index ending down just slightly by
\n0.106 points to 1,138.88.<\/p>\n
The rupiah has been weakening over the past several weeks as a
\nresult of huge dollar demand from state oil and gas firm PT
\nPertamina to finance oil imports in its effort to return the
\ncountry's recently declining fuel stocks to a "safe" level of 22-
\ndays supply.<\/p>\n
The situation has been exacerbated by the fact that global oil
\nprices recently touched a record high of $60 per barrel, making
\nPertamina's import costs even higher.<\/p>\n
Other local companies, meanwhile, compounded the problem with
\nstrong demand for the dollar to finance their own import needs
\nand pay maturing foreign debts.<\/p>\n
In terms of external factors, things were no more better for
\nthe rupiah as the dollar continued its winning streak against
\nthe euro and the Japanese yen, and the market maintained its
\nexpectation that the U.S. Federal Reserve would continue to
\nincrease its benchmark interest rate.<\/p>\n
The Fed raised its benchmark interest rate to 3.25 percent
\nlast week, making the greenback more attractive to the market.<\/p>\n
Indeed, when the rupiah passed the psychological level of Rp
\n9,800 on Monday, the local market quickly started buying up
\nwhatever dollars were available on fears that the rupiah would
\ncontinue to fall, which in turn only pushed the rupiah down
\nfurther.<\/p>\n
Suspected intervention by the central bank through state banks
\nproved useless as the demand for dollars consistently exceeded
\nsupply.<\/p>\n
In the light of the local units seemingly inexorable decline,
\nState Minister for National Development Planning Sri Mulyani
\nIndrawati said on Monday that the government hoped the central
\nbank would immediately tighten up monetary policy so as to defend
\nthe rupiah and prevent its freefall from affecting the country's
\nmacroeconomic fundamentals.<\/p>\n
Bank Indonesia (BI) deputy governor Aslim Tadjuddin said last
\nweek that the rupiah was undervalued by 8 percent at its current
\nlevel and that the central bank would continue intervening if
\nnecessary.<\/p>\n
The central bank recently unveiled a plan to issue a new
\nruling limiting overseas dollar inflows without underlying assets
\nto a maximum of US$1 million in order to curb dollar speculation.
\nThe ruling, however, will only come into effect on July 14.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-remains-under-pressure-closes-at-9855-1447893297",
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"sponsor": "Okusi Associates",
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