Try says forex ethics important<\/p>\n
JAKARTA (JP): Vice President Try Sutrisno called on local
\nforeign exchange (forex) dealers and bank managers to respect the
\ncode of conduct in their money market transactions.<\/p>\n
When opening the 17th Asia Pacific Forex Assembly here
\nyesterday, Try also made an appeal to forex dealers and bank
\nmanagers to uphold business ethics in all dealings.<\/p>\n
Try acknowledged that forex dealers of banks generally conduct
\ntheir transactions on the basis of a profit target set by their
\ntop management.<\/p>\n
\"This has sometimes led the dealers to disregard business
\nethics and social responsibility, which should always be
\nrespected by everybody in the business, including the top
\nmanagement,\" he said.<\/p>\n
In their efforts to make Indonesia one of the international
\nfinancial centers, he said, Indonesian forex dealers must
\ncontinue to consistently follow the rules, including the code of
\nconduct approved by the Association Combiste Internationale.<\/p>\n
Indonesian dealers do not have their own code of conduct yet.
\nCurrently, Bank Indonesia (the central bank), in cooperation with
\nthe Forex Club Indonesia, is designing a code of ethics.<\/p>\n
Try said Indonesia should cater to the tremendous financial
\ngrowth in the Asia-Pacific. This growth has prompted considerable
\nincreases in financial transactions between region's countries,
\nas well as between the region and the rest of the world.<\/p>\n
Quoting results of a survey, Try said foreign exchange
\ndealings currently amounted to US$1.2 trillion per day, compared
\nwith $880 billion per day recorded in 1992.<\/p>\n
Perception<\/p>\n
The Vice President also called on forex dealers to be more
\ncautious in drawing conclusions about any country's conditions as
\ntheir perceptions influence the direction of the international
\nmoney market.<\/p>\n
\"A negative perception of a country's foreign exchange
\nposition, or its economic or political conditions, can easily
\ncause a fall in its exchange rate, irrespective of whether the
\nperception is based on reliable information or mere rumors,\" Try
\ntold 700 local and foreign forex dealers and bank managers.<\/p>\n
Because international money market developments can have far
\nreaching repercussions as a result of forex dealers' perceptions,
\nTry said, it is imperative that central banks work closer
\ntogether to influence exchange rates.<\/p>\n
\"It is impossible for a central bank to mitigate the
\nfluctuations in its foreign exchange rate on its own,\" Try said.<\/p>\n
Supporting Try's argument, Governor of Bank Indonesia J.
\nSoedradjad Djiwandono said central banks in the Asia-Pacific
\nregion had concluded an agreement in Hong Kong recently to
\ncooperate in fighting possible speculative attacks.<\/p>\n
Speaking at yesterday's assembly, Soedradjad noted that the
\ntask of maintaining currency stability is becoming more difficult
\nregarding instability which might occur due to speculative
\nattacks on the currency.<\/p>\n
He said the government would continue to maintain macro-
\neconomic stability both through prudent fiscal and monetary
\npolicies, as well as through realistic exchange rate policies.<\/p>\n
\"The central bank wants financial stability. Financial market
\nplayers, however, don't want it as they say it makes for a dull
\nmarket,\" Soedradjad said.<\/p>\n
In bridging its investments-savings gap, Soedradjad said, the
\ngovernment would continue to invite foreign capital inflow
\nthrough direct and portfolio foreign investment.<\/p>\n
The government will not issue debt instruments to close the
\ngap, Soedradjad said. It remains concerned about the level of
\nforeign participation in its debt market.<\/p>\n
This does not mean that the domestic debt market will not grow
\nbecause the government will continue to assign state-owned
\ncompanies to issue bonds to stimulate domestic bond markets, he
\nsaid.<\/p>\n
It is expected that rupiah commercial papers issued by a
\nnumber of state-owned and also leading privately-run companies
\nwill eventually create a benchmark for bond issuances from
\nIndonesian companies, Soedradjad said. (rid)<\/p>",
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