Rupiah's tumble seen to shore up inflation<\/p>\n
JAKARTA (JP): The rupiah's sharp depreciation against the U.S.
\ndollar will result in a higher inflation rate, State Minister of
\nNational Development Planning Ginandjar Kartasasmita said
\nyesterday.<\/p>\n
Speaking to journalists after attending the independence day
\nceremony at Merdeka Palace, Ginandjar said the cost of several
\nproducts with high import contents would go up as a result of the
\nstrengthening dollar.<\/p>\n
"I would say inflation will rise. It's impossible for us to
\nsay this year's inflation will not be affected (by the weakening
\nrupiah)," Ginandjar said.<\/p>\n
Following repeated attacks on the rupiah, the monetary
\nauthority floated the currency last Thursday. The move weakened
\nthe rupiah to an all-time low of 2,960 Friday.<\/p>\n
Ginandjar said the government was capable of calming the
\nturbulent market as it had dealt with the aftermath of rupiah
\ndevaluations in the past.<\/p>\n
"We hope the situation will stabilize again soon and then
\nwe'll make every effort to contain the inflation rate," Ginandjar
\nsaid.<\/p>\n
The government has targeted an average annual inflation rate
\nof about 5 percent for between April 1994 and March 1999.<\/p>\n
Indonesia's inflation rate reached 6.47 percent in 1996
\ncompared to 8.64 percent the previous year.<\/p>\n
Ginandjar said the weakening rupiah was a blessing in disguise
\nfor Indonesia's non-oil exports as it would make Indonesia's
\nproducts more competitive in dollar terms.<\/p>\n
He echoed President Soeharto's speech before the House of
\nRepresentatives Saturday, calling on small-scale enterprises to
\nmake use of the weaker rupiah to boost exports.<\/p>\n
"Small- and medium-scale enterprises are more flexible. And I
\nthink they would be prepared to make use of this situation to
\ndrive exports," the minister said. (rid)<\/p>",
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