Rupiah's response satisfactory: Sjahril<\/p>\n
TOKYO (Dow Jones): The rupiah's response to Friday's increase
\nin interest rates on all maturities of Sertifikat Bank Indonesia
\nmoney market instruments was satisfactory, and the central bank
\nstands ready to adjust interest further if needed to stabilize
\nexchange rates, Bank Indonesia (BI) Governor Sjahril Sabirin said
\nyesterday.<\/p>\n
Speaking in an interview with Dow Jones Newswires, Sjahril
\nsaid, \"The main purpose of the rate increase was to prevent the
\nworsening of the rupiah's value. We would like to the dollar fall
\nbelow Rp 9,000, but at least further deterioration of the rupiah
\nwas prevented.\"<\/p>\n
The central bank raised the SBI rates Friday between four and
\n12 percentage points in its bid to support the rupiah.
\nIndonesian financial markets were closed for a holiday Monday,
\nbut the announcement pushed the dollar lower to a close of
\nIDR9,187 Friday from Rp 9,650 Thursday.<\/p>\n
Asked if he was satisfied with the rupiah's initial response
\nto Friday's rate move, Sjahril answered, \"Yes.\"<\/p>\n
Asked to comment on Indonesia's Coordinating Minister for
\nEconomy, Finance and Industry Ginandjar Kartasasmita's prediction
\nearlier Monday that the rupiah would stabilize around Rp 6,000 to
\nthe U.S. dollar by the first quarter of 1999, Sjahril said that
\n\"it was very realistic to have the rupiah at Rp 6,000\" to the
\ndollar.<\/p>\n
He said the fall of the rupiah was a \"problem of confidence\"
\nand that before the news of the demonstrations he would have
\nexpected the rupiah to rise further against the dollar to below
\nRp 8,000, especially after the agreement with the International
\nMonetary Fund.<\/p>\n
But the governor said the impact of the riots, which he said
\nthe government had mostly contained, on the rupiah would be
\ntemporary. The currency was trading around Rp 9,300 to the dollar
\nas he spoke.<\/p>\n
As for support for the rupiah by the Bank of Japan by selling
\ndollars for rupiah, which occurred last autumn, he said he hadn't
\nraised the issue with the BOJ.<\/p>\n
Sjahril said he didn't expect to discuss the topic during a
\nmeeting Tuesday with the Japanese central bank chief, Masaru
\nHayami, reiterating that restoring confidence in Indonesia was
\nmore important than intervention. He described the planned
\nmeeting as a courtesy call.<\/p>\n
Nevertheless, asked whether intervention by the BOJ to support
\nthe yen would help the rupiah, he said, \"I can't say there's a
\ndirect connection, but a stronger yen also will imply stronger
\nregional currencies vis-a-vis the dollar.\"<\/p>\n
On the question of whether more financial institutions will be
\nclosed, the governor said it depended on how successful their
\nrestructuring was under the Indonesian Bank Restructuring Agency.<\/p>\n
He said \"there remains a possibility\" that further financial
\ninstitutions may be suspended or closed and that the government
\n\"may be able to conclude in a few months\" whether such steps are
\nnecessary.<\/p>\n
But even if institutions are closed, he reiterated the
\ngovernment's guarantee for all deposits until January 2000, when
\nthe new deposit insurance corporation is expected to kick off.<\/p>",
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"sponsor": "Okusi Associates",
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