Rupiah to settle at 2,550-2,600: Lehman<\/p>\n
JAKARTA (JP): Lehman Brothers' chief economist on Southeast
\nAsia, Arup Raha, predicted here yesterday that the rupiah would
\neventually stabilize below 2,600 against the U.S. dollar on the
\nback of sound economic fundamentals.<\/p>\n
Raha predicted that the rupiah would not rebound to its
\nprevious level of 2,450 (before the July 21 turbulence) but would
\nsettle at a fair price of between 2,550 and 2,600.<\/p>\n
"Based on current account and capital account reasons, I think
\nthe rupiah will settle within that range," Raha added.<\/p>\n
Meanwhile, Bank Indonesia governor J. Soedradjad Djiwandono
\nhinted yesterday that the central bank would continue to drain
\nshort-term rupiah from the market to discourage further
\nspeculations on the currency.<\/p>\n
Speaking after the installation of 24 directors at state
\nbanks, Soedradjad said the central bank would continue
\nstabilization efforts in its management of the supply of both
\ndollars and rupiah.<\/p>\n
"Rupiah and dollar markets are two interdependent markets. If
\nyou want to control the situation, you must handle the two. You
\ncannot maintain dollars, but at the same time supply rupiah,"
\nSoedradjad said.<\/p>\n
Spot rupiah was stable at 2,608\/2,612 at yesterday's close,
\nexactly the same as at the previous day's close, a dealer said.<\/p>\n
He said there were some dollar purchases from offshore
\noperators in the afternoon, but a tight rupiah market limited the
\nupside.<\/p>\n
The central bank yesterday maintained the three-day Bank
\nIndonesia Certificate (SBI) at 14.0 percent, four-to-six day at
\n15.0 percent, one-week at 10.0 percent, two-week at 10.5 percent,
\none-month at 11.125 percent, three at 11.0, six at 11.625 and
\none-year at 12.25 percent.<\/p>\n
Soedradjad called on the public to read the current weakening
\nof the rupiah as a regional phenomenon.<\/p>\n
He said the U.S. dollar strengthened against the rupiah and
\nall regional currencies, especially the Thai baht, the
\nPhilippines peso, the Malaysian ringgit and the Singapore dollar.<\/p>\n
Raha told newsmen the recent rupiah volatility was caused by
\nexternal factors, not by Indonesia's macroeconomic fundamentals.<\/p>\n
"Our analysis shows that as far as Indonesia is concerned the
\nrupiah turbulence is not driven by domestic reasons but by purely
\nexternal reasons," Raha said.<\/p>\n
"In other words, the fundamentals of the Indonesian economy
\nare very, very strong," he said.<\/p>\n
He said that the weakening rupiah was not caused by the
\ncountry's economic fundamentals.<\/p>\n
"Do you believe something has fundamentally changed in
\nIndonesian economy over the last month or so? The answer is no,"
\nRaha said.<\/p>\n
Raha said the country's economy was driven by a robust
\ndomestic and foreign investment which would eventually increase
\nthe production capacity of the economy.<\/p>\n
Although non-oil exports were a cause of concern for
\nIndonesia, the overall balance of payments was still healthy and
\nthe current account deficit, which stood at 3.5 percent of gross
\ndomestic product, was sustainable, he said.<\/p>\n
"Lehman Brothers sees the Indonesian economy as fundamentally
\nsound and we are excited about the country's longer-term
\nprospects," Raha said.<\/p>\n
Raha said Indonesia's strong fundamentals would prevent the
\nrupiah from devaluation, as happened to the Thai baht and the
\nPhilippine peso.<\/p>\n
Bank Indonesia has projected that the rupiah will be stable at
\nbetween 2,555 and 2,610 against the greenback.<\/p>\n
Danareksa Securities' chief economist Rino Agung Effendi, who
\nwas also at the conference, agreed saying the rupiah would not
\neven touch the upper end level of the central bank's intervention
\nband.<\/p>\n
Bank Indonesia widened the dollar-rupiah intervention band on
\nJuly 11 from eight percent to twelve percent to avert speculative
\nattacks.<\/p>\n
The central bank yesterday kept its intervention band at
\n2,378\/2,682 but raised the conversion band to 2,585\/2,633 from
\n2,575\/2,623 on the previous day. (aly\/rid)<\/p>\n
Currency -- Page 11<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-to-settle-at-2550-2600-lehman-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }