BI denies freezing U.S. dollar accounts
BI denies freezing U.S. dollar accounts
JAKARTA (JP): Bank Indonesia, the central bank, yesterday
denied rumors that it would convert bank deposits into government
bonds and freeze U.S. dollar accounts.
"Regarding the misleading rumors that the government would
convert bank deposits above certain amounts into government
bonds, it must be stressed that the news is not true at all," the
central bank said in a statement.
"It is also not true that the government would freeze U.S.
dollar accounts at banks," the bank said.
Rumors have been circulating here that the government would
convert bank deposits of more than Rp 20 million (US$5,120) into
government bonds so that the money would be kept longer in the
banking system and not redeemed to buy U.S. dollars.
Rumors also created concern that the government might freeze
dollar accounts to give support to the rupiah.
"We appeal to the public not to believe such rumors and rely
on government policy and information," the central bank pleaded.
"Public calm will help greatly in our effort to restore the
economy and strengthen our economic defense to face the monetary
crisis confronting this region," it added.
Bank Indonesia's denial, combined with its market
intervention, stabilized the rupiah at 3,940 against the U.S.
dollar at the spot market -- approximately the same level of the
previous day's close.
Currency dealers said that the central bank was seen
intervening in the market after the rupiah touched the day's low
of 3,955 to the dollar.
They said the central bank had tried to drain some excess
rupiah from the money market by bidding overnight money at around
15 percent through some state banks.
The central bank had absorbed some overnight money Wednesday
from the interbank market along with overnight and one-week swaps
in an effort to slow the fall of the rupiah.
Meanwhile, International Monetary Fund (IMF) Managing Director
Michel Camdessus said yesterday in Tokyo that it could take
several more months to see a turnaround in the Indonesian
economy.
But he added that the rupiah would stabilize if Indonesia
remained committed to implementing its IMF program.
"In the case of Mexico, it took several months... before the
economy had its U-turn. It will possibly take several months more
for a U-turn to materialize (in the Indonesian economy)," he was
quoted by Reuters as telling a news conference.
"I received from President Soeharto the strongest assurances
that he himself was fully backing the (IMF) program," he said.
"I believe that if they continue in that direction, you will
see not only the rupiah stabilize, but the economy to be prepared
for an extremely good new start." (aly/rid)
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