Sjahril upbeat about rupiah<\/p>\n
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on
\nTuesday that the rupiah would continue to strengthen until the
\nend of the year amid signs of improvements in the economy.<\/p>\n
\"I'm optimistic that the rupiah will at least hold at the
\ncurrent level,\" he told reporters following a meeting with
\nPresident B.J. Habibie.<\/p>\n
He explained that various factors, including politics would
\ncontinue to cause fluctuations in the exchange rate against the
\nU.S. dollar, but the increasing credibility of the government's
\neconomic reform program and signs of improvement in the economy
\nwould offset any negative factors.<\/p>\n
The country is scheduled to hold a special session of the
\nPeople's Consultative Assembly (MPR), the country's top policy-
\nmaking body, from Nov. 10 to Nov. 13 to set the date for next
\nyear's general election and adopt other measures to accelerate
\nthe democratization process.<\/p>\n
\"There will still be fluctuations... but the trend toward a
\nsteady appreciation of the rupiah is there,\" he said.<\/p>\n
The rupiah has appreciated by about 40 percent since late last
\nmonth.<\/p>\n
The currency remained flat at Rp 7,400 to the dollar on
\nTuesday; dealers said there were few fresh incentives in the
\nmarket.<\/p>\n
Sjahril declined to give any ideal level for the currency,
\nsaying, \"I don't have an ideal target. If it (the rupiah) can
\nhold on to the current level I'll be happy, and if it can
\nstrengthen a little more I will be even happier.\"<\/p>\n
Sjahril said last week that the rupiah could strengthen to
\nbetween Rp 6,000 and Rp 6,500 by the end of the year.<\/p>\n
The government had earlier targeted the currency to be at Rp
\n10,000 by the end of the year.<\/p>\n
Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita made a controversial statement last week
\nwhen he said that the ideal level of the rupiah was between 7,000
\nand 8,000 to maintain the country's export competitiveness.<\/p>\n
The comment caused a sharp reverse in the upward trend in the
\ncurrency on Thursday but the rupiah has since strengthened again.<\/p>\n
Sjahril said that a further strengthening of the rupiah from
\nthe current level would hurt exporters only temporarily as they
\nwould gain in the longer term from cheaper imported raw
\nmaterials.<\/p>\n
Sjahril also denied a newspaper report that the central bank
\nwas planning to reintroduce a trading band for the rupiah once
\nthe currency reached a certain level.<\/p>\n
\"We have no plans in that direction. With the current system,
\nthe rupiah has managed to strengthen and hopefully it can
\nstrengthen further,\" he said.<\/p>\n
The government abandoned the trading band in August last year
\nafter a massive amount of the country's forex reserves were used
\nup trying to keep the rupiah in the targeted trading range.<\/p>\n
Sjahril, however, added that the central bank was studying
\nvarious alternatives to the current free float system.<\/p>\n
He also said that Bank Indonesia would continue to improve the
\ncountry's forex monitoring system, including by improving the net
\nopen position of commercial banks.<\/p>\n
Separately, the central bank announced on Tuesday that
\nIndonesia's net international reserves increased by US$64.9
\nmillion to $13.9 billion in the week ending Oct. 23 from $13.8
\nbillion in the previous week.<\/p>\n
The increase resulted from foreign loan disbursements and
\nforeign exchange revenue from the export of oil and natural gas,
\nthe central bank said in a statement.<\/p>\n
It added that the reserve level was above the $11.67 billion
\nminimum level set by the International Monetary Fund. (rei)<\/p>",
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