Rupiah to strengthen, keep inflation in check<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The central bank expects the rupiah to strengthen against the
\nU.S. dollar leading up to the year-end on the back of a better
\neconomic outlook and high hopes for the new government of Susilo
\nBambang Yudhoyono.<\/p>\n
Bank Indonesia deputy governor Aslim Tadjudin said on Friday
\nthat the stronger rupiah would help keep inflationary pressure in
\ncheck at a time when demand for food items and goods is on the
\nrise during the year-end festive period.<\/p>\n
\"There is a positive perception of the new government that it
\nwill be able to boost the economy,\" he said, adding that the
\nmarket was now awaiting the announcement of the Cabinet lineup.<\/p>\n
\"Hopefully the new president will form a Cabinet that is
\nacceptable to the market.\"<\/p>\n
Susilo, to be sworn as president on Oct. 20, has pledged to
\nboost economic growth and stamp out flourishing graft -- all
\nneeded to help tackle the problems of chronic unemployment and
\npoverty.<\/p>\n
Another factor that would help the local currency to
\nstrengthen is the U.S.' whooping trade and budget deficit
\ndeficits, he added.<\/p>\n
On Thursday, the U.S. government announced its 2004 budget
\ndeficit at US$413 billion, a record high -- which would
\neventually affect the performance of the greenback, Aslim added.<\/p>\n
He said both internal and external factors would help keep the
\npressure off the rupiah, which has fallen by more than 7 percent
\nso far this year.<\/p>\n
Last week, Aslim also said the local currency would strengthen
\nto below 9,000 per dollar by the end of the year.<\/p>\n
The rupiah closed on Friday at 9,100 a dollar, unchanged from
\nthe previous closing.<\/p>\n
Aslim added that the stable rupiah would help contain the
\ninflation level in the next three months, during which demand for
\ngoods would rise in line with religious festivities -- including
\nthe fasting month of Ramadhan, Idul Fitri and Christmas.<\/p>\n
\"It has to be supported by the government's decisive moves to
\nsecure the supply of all goods so as not to put extra pressure on
\nthe prices,\" said Aslim.<\/p>\n
Assuming there are no disruptions in supply and distribution
\nof goods, coupled with a relatively stable rupiah, Aslim expects
\ninflation in the last three months of the year will be limited to
\n2.2 percent.<\/p>\n
If it materializes, it would mean that the full-year inflation
\nwould stand at 6 percent, lower than the 7 percent target as set
\nout earlier by the government and the central bank.<\/p>\n
The Central Statistics Bureau (BPS) reported inflation at 3.8
\npercent in September.<\/p>\n
The country would need a low inflation rate to soften the
\nstrain on the central bank in increasing the interest rate on its
\nbenchmark promissory notes -- which may otherwise hurt growth
\nprospects as loans for economic activities would become less
\naffordable for businesses.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-to-strengthen-keep-inflation-in-check-1447893297",
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"sponsor": "Okusi Associates",
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