BI signals more intervention next week

BI signals more intervention next week

The Jakarta Post, Jakarta

Bank Indonesia said that it would remain on alert over further slides in the rupiah, signaling more market intervention a week after the Bali terrorist strike renewed pressure against the local unit.

Central Bank Deputy Governor Miranda Goeltom said on Friday that interventions in the money market was "still necessary from time to time."

"We'll continue to monitor the market and intervene if need be," she told reporters.

Currency players were seen dumping their rupiah throughout the week after the Bali bomb explosions hurt market sentiment.

But analysts said that Bank Indonesia helped stem the decline, allowing the rupiah to end the week at 9,210 against the U.S. dollar, moderately lower from 9,010 before the bombing.

In a statement the central bank also said it was expecting the rupiah to remain stable for the remainder of the year. This would help alleviate pressure on inflation which tends to rise during the upcoming holiday seasons of Christmas and Idul Fitri.

"A stable rupiah and interest rates are expected for the rest of 2002, so that inflation pressure is not that worrisome," the statement said.

Analysts however, warned that the rupiah was not yet in safe territory. Market players remained edgy as the extent of the economic fallout from Bali was just beginning to be calculated, they said.

Companies with foreign debts were moving forward their dollar purchases to anticipate the unit becoming more expensive.

However Bank Indonesia Senior Deputy Governor Anwar Nasution said the impact of the Bali attack on the rupiah was temporary, although likely to extend to next week's trading.