Rupiah rises 8 percent on joint intervention, reform<\/p>\n
JAKARTA (JP): The rupiah rose 8 percent against the U.S.
\ndollar in hectic trading yesterday as Indonesian, Singaporean and
\nJapanese central banks jointly intervened in the market to
\nsupport the rupiah, dealers said.<\/p>\n
The rupiah surged to a high of 3,240 against the greenback
\nbefore closing at 3,270\/3,300, compared with an opening of
\n3,540\/3,555.<\/p>\n
Minister of Finance Mar'ie Muhammad said in a statement that
\nthere was a concerted effort by Bank Indonesia, the central bank,
\nand Singaporean and Japanese central banks to support the rupiah.<\/p>\n
\"Bank Indonesia acted in the local market today (yesterday),
\ntogether with both the Bank of Japan and the Monetary Authority
\nof Singapore in support of the Indonesian rupiah,\" Mar'ie said.<\/p>\n
\"Today's concerted effort was aimed at strengthening the
\nrupiah to levels more appropriate with the fundamentals of the
\nIndonesian economy,\" Mar'ie said.<\/p>\n
Mar'ie noted the joint effort would contribute positively to
\nthe implementation of the reform package which was supported by
\nfinancial assistance from the International Monetary Fund (IMF),
\nthe World Bank and the Asian Development Bank.<\/p>\n
He said the three monetary authorities were ready to take
\nnecessary steps in the future to maintain the stability of the
\nrupiah as part of the program to achieve currency stability in
\nthe region.<\/p>\n
Singaporean and Japanese finance ministers were quoted by
\nReuters and AFP as saying that their central banks had intervened
\nto show confidence in the macroeconomic policies of the
\nIndonesian government.<\/p>\n
\"Singapore's participation in this joint intervention reflects
\nour confidence in the macroeconomic policies of the Indonesian
\ngovernment,\" Singaporean Finance Minister Richard Hu said in a
\nstatement.<\/p>\n
Japanese Finance Minister Hiroshi Mitsuzuka, in a different
\nstatement, said: \"This operation is aimed at correcting the
\nexcessive depreciation of the Indonesian rupiah.\"<\/p>\n
Currency dealers said the amount of intervention was quite
\nlarge yesterday. An estimate put it at some $1 billion.<\/p>\n
Besides joint intervention, dealers said, positive sentiment
\nin the government's reform package and tight liquidity also
\nshored up the rupiah's value.<\/p>\n
They said the mood was positive after a weekend of encouraging
\nmoves to regain public confidence and yesterday's announcement of
\nfurther deregulation measures to strengthen the economy.<\/p>\n
\"I think market confidence in the country's economy is
\nimproving bit by bit as the government moves decisively to
\nstrengthen the economy,\" a local bank dealer said.<\/p>\n
Dealers said liquidity was sufficient in the morning but
\nincreasingly tight in the afternoon following the closure of 16
\ninsolvent banks by the government on Saturday.<\/p>\n
\"Some operators have held on to excess funds in anticipation
\nof possible runs by depositors,\" a dealer said.<\/p>\n
Overnight money was quite mixed, with some banks paying 13
\npercent to 14 percent in the afternoon, while others paid above
\n40 percent and some even 100 percent, he said.<\/p>\n
The strengthening rupiah failed to impress the Jakarta Stock
\nExchange, whose composite index flatly ended at 501.71 from
\nFriday's close of 500.41.<\/p>\n
Turnover totaled 510.7 million shares worth Rp 621.43 billion
\n($188.3 million).<\/p>\n
Trimegah Securities head of research David Chang said the
\nmarket was somewhat positive about the government's reform
\npackage but still cautious about the possible impact of the
\nliquidation of 16 banks on some listed firms.<\/p>\n
\"The package is good for the economy in the long run. The
\nreform is good because it shows foreign investors that the
\ngovernment is willing to make painful adjustments to turn the
\neconomy around,\" Chang said.<\/p>\n
\"But in the short term, the economy may have to suffer. The
\nclosure of 16 banks could drag down sound companies. That's why
\npeople are very, very careful now, waiting for the consequences,\"
\nhe added. (rid)<\/p>\n
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