Rupiah's sharp fall 'temporary'<\/p>\n
JAKARTA (JP): The governor of Bank Indonesia, the central
\nbank, J. Soedradjad Djiwandono, said yesterday that he was
\noptimistic the rupiah's free fall was temporary.<\/p>\n
Soedradjad said the rupiah's sharp fall against the U.S.
\ndollar was caused more by market sentiment rather than the
\ncountry's economic fundamentals.<\/p>\n
He said the sharp fall in the rupiah in the last two days was
\ndue to the market's negative reaction toward the draft state
\nbudget for fiscal 1998\/1999.<\/p>\n
\"It is only a temporary reaction. In academic terms it is
\ncalled an announcement effect,\" Soedradjad said after meeting
\nwith President Soeharto at his residence on Jl. Cendana, Central
\nJakarta.<\/p>\n
Soedradjad, who just returned from an overseas trip to have a
\nknee surgery, also defended the use of an average exchange rate
\nof Rp 4,000 to the dollar in the draft budget.<\/p>\n
\"It will be an average rate for one year (starting in April),\"
\nhe said.<\/p>\n
During the meeting, Soedradjad was accompanied by
\nMinister\/State Secretary Moerdiono and the central bank's newly
\nappointed directors Iwan R. Prawiranata, Miranda S. Gultom,
\nSjahrir Sabirin and Aulia Pohan.<\/p>\n
When asked about the central bank's measures to curb the
\nrupiah's fall, Soedradjad said, \"As what we have done in the
\npast, basically we have intervened to prevent further
\nfluctuation. Market sentiment has triggered very strong demand
\nfor the dollar, but it has not only occurred here.\"<\/p>\n
When asked about the International Monetary Fund's (IMF)
\ndisappointment over Indonesia's commitment to restructure its
\neconomy, Soedradjad said the government always worked closely
\nwith the IMF, the Asian Development Bank (ADB) and the World
\nBank.<\/p>\n
\"The IMF program is still relevant,\" he said.<\/p>\n
IMF officials called Indonesia's crisis worrisome Tuesday and
\nfaulted the government for failing to follow through on pledges
\nto restructure its economy.<\/p>\n
The rupiah finally broke 10,000 yesterday after making a
\nseries of record lows in the last several days.<\/p>\n
The U.S. dollar has gained more than 300 percent against the
\nrupiah since the monetary turmoil first hit the country in July
\nlast year.<\/p>\n
Soedradjad said the central bank's foreign exchange reserves
\nwere within a safe level, totaling about US$21.4 billion, enough
\nto finance about five months of imports.<\/p>\n
Separately Coordinating Minister for Production and
\nDistribution Hartarto said the country's foreign trade activities
\nshowed impressive progress last year.<\/p>\n
\"From January to October last year we enjoyed an international
\ntrade surplus of $8.8 billion resulting from total exports of
\n$43.9 billion compared to imports of $35.2 billion,\" Hartarto
\nsaid after meeting with Soeharto at his residence.<\/p>\n
Non-oil and gas exports totaled $34.3 billion, representing a
\n9.7 percent increase over the same period in 1996. Oil and gas
\nexports were about $9.6 billion, representing a 2.9 percent
\nincrease over 1996.<\/p>\n
Non-oil and gas imports totaled $31.9 billion, or down 2.1
\npercent compared to 1996. Oil and gas imports were about $3.3
\nbillion, or an increase of 17 percent compared to the previous
\nperiod.<\/p>\n
\"The President ordered an all-out effort to boost overall
\nexports,\" Hartarto said.<\/p>\n
The minister said farmers enjoyed great benefits from the
\nrupiah's depreciation because the export of agricultural products
\nwas very competitive.<\/p>\n
\"For example, Cocoa farmers in Sulawesi and pepper growers in
\nBangka, Sumatra, are benefiting greatly from higher export
\nprices\", Hartarto said. (prb)<\/p>",
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