Sun, 19 Sep 2010

Jakarta (ANTARA News) - Bank Indonesia (BI) Governor Darmin Nasution said here on Friday that the present rupiah exchange rate was still competitive for the national economy compared to those of the currencies of neighbouring countries.

"The argument that our competitiveness has declined because of the rupiah`s appreciation is not valid because the currencies of other countries have appreciated even more," he said.

He said until Friday the exchange rate of the rupiah was Rp8,980 against the US dollar while its yearly average is still at Rp9,130 or it has only appreciated by 4.8 percent since early this year.

"That is the same as that of Philippine Peso but is smaller than Thai Baht which is 7 percent and Malaysian ringgit 8 percent," he said.

Darmin admitted BI had bought US dollars to make the rupiah remain stable and its volatility not to big.

He said the view of some ministers that the rupiah was no longer competitive for trade was not correct because the rupiah was not alone.

Regarding the assumption for the rupiah exchange rate in the 2011 draft budget which is set at Rp9,300 per US dollar Darmin said that the government did not wish to weaken the rupiah but based upon the results of calculation made along with BI, the high inflation next year could lower the value of the rupiah.

"The fact is if the capital from abroad keeps flowing in certainly the rupiah will not be able to stand at that level (Rp9,300 against the US dollar)," he said.

The huge flow of foreign capital into Indonesia coupled by the depreciation of the US dollar against other currencies recently have made the rupiah value to appreciate to Rp8,900.

Several ministers however felt that the appreciation was too high and therefore could disrupt domestic industrial exports.