Foreign exchange

A local daily recently reported a prominent economist as saying that the government cajole private enterprise or individuals who keep their money abroad in the form of time deposits to withdraw it and transfer it back to Indonesia.

According to the economist, if hundreds of billions of U.S. dollars enter Indonesia, the supply of dollars would be so abundant and the exchange value of the rupiah so strong again that the normal pre-July rate of Rp 2,500 to the dollar would not be impossible.

After all, the basic principle of economics is the supply and demand factor. If the equilibrium is effected, chaos will be the result. If the feeling of patriotism can be achieved or restored to those affluent people with foreign deposits, then I believe that the present monetary crisis can be overcome.

In an era of free foreign exchange, the wealthy keep some of their money abroad as a reserve for a rainy day.

However, about half a century ago when the possession of forex was prohibited, a black market of forex appeared out of nowhere. This was despite the fact those found guilty of involvement in the restricted forex system could expect to spend a few years in jail as punishment. When inflation was uncontrollable, I remember there was a bank willing to pay 10 percent interest per month on time deposits. In such a case, speculators and opportunists have a good time.

A. DJUANA

Jakarta