BI sees rupiah at Rp 9,300, and inflation at 8%
BI sees rupiah at Rp 9,300, and inflation at 8%
The Jakarta Post, Jakarta
The rupiah's exchange rate against the U.S. dollar will likely
overtake the government's estimate of Rp 8,900 for the 2005 state
budget, reaching Rp 9,300 for the whole year, Bank Indonesia (BI)
said.
Similarly with the inflation rate, the central bank is also
seeing the possibly of it exceeding the government's target of
between 5 and 7 percent, ending at 8 percent on further price
surges of goods and services.
Speaking during a hearing on Thursday with the House of
Representatives' Budget Commission, BI senior deputy governor
Miranda S. Goeltom said that the expected Rp 8,900 exchange rate
would be difficult to achieve based on current developments.
"It will most likely be between Rp 9,000 and Rp 9,300," she
said.
Miranda explained that the Rp 8,900 level would most likely be
unattainable as the rupiah's average exchange rate had already
reached Rp 9,373 per dollar as of May. The central bank
previously reported that the local currency's exchange rate had
reached Rp 9,279 during this year's first quarter.
Even though the rupiah was likely to experience a gain against
the greenback for the remainder of the year, a continuous strong
domestic demand for dollars would offset the gain, she added.
The government is currently in talks with the Budget
Commission to revise the 2005 state budget, taking into account
among others, recent rupiah downturns, rising inflationary
pressure, and higher oil prices.
The rupiah exchange rate was previously set at Rp 8,600 per
dollar, and the inflation rate 5.5 percent. The government also
upgraded its oil price assumption from $24 per barrel to $35.
Meanwhile, Miranda said that it was likely that inflation
would continue to rise due to a second-round effect of the recent
fuel price hike, as well as rising demand for goods and services.
The government hiked domestic fuel prices by an average of 29
percent in March to cut bloating fuel subsidies on soaring global
oil prices. The decision resulted in an on-year inflation surge
of up to 8.81 percent during that month, the Central Statistics
Agency (BPS) reported, before dropping to 8.12 percent in April.
"For this, BI will continue to maintain its tight monetary
policy, while still taking into consideration the necessity of
sustaining the current momentum of economic growth," Miranda
said.
The BPS reported earlier this month that Indonesia's economy
had slowed slightly down to 6.35 percent during this year's first
quarter, as compared to last year's final quarter of 6.65
percent.