Daring measures needed?

When market sentiments are nervous and highly sensitive to breaking news, any moves with the potential to disrupt tranquility should, in theory, be avoided.

Surprisingly, however, the currency market reacted positively, against all expectations, to news that Bank Indonesia Governor Soedradjad was being replaced. The rupiah's value on the spot market rose by 400 points against the U.S. dollar.

Continuing volatility in the rupiah-dollar exchange rate reflects the strong linkage between political decision-making and the currency markets. Tuesday's positive reaction toward Soedradjad's replacement suggests that the market has been awaiting daring political moves, which our leaders have been hesitant to conjure. If this is true, then it implies that courage is needed to address the current monetary crisis.

If the President has deemed it necessary to replace his central bank governor at a time like this, strong and compelling reasons for this courageous decision must exist.

-- Media Indonesia, Jakarta