Government, BI to curb currency speculation
Government, BI to curb currency speculation
JAKARTA (JP): The government and Bank Indonesia have agreed to
immediately take measures to help reduce pressure on the ailing
rupiah, including limiting speculation.
"Looking at the latest exchange rate development, the
government and Bank Indonesia have agreed to immediately take
measures to reduce pressure on the exchange rate of the rupiah,
especially by reducing speculative foreign exchange
transactions," the government and Bank Indonesia said in a joint
press statement, co-signed by Coordinating Minister for the
Economy Rizal Ramli and Bank Indonesia senior deputy governor
Anwar Nasution, issued late on Thursday.
"Bank Indonesia will also intensify the monitoring of vostro
accounts, including conducting on-site supervision of banks that
actively carry out foreign exchange transactions," the statement
said.
Vostro account is a demand deposit account maintained for a
local bank by a bank in a foreign country. It is used primarily
to arrange foreign exchange transfers between the respective
banks.
It is unclear whether there would be new measures to curb
currency speculation as the statement lacked details. However,
on-site supervision has been started a few months ago.
The press statement was issued following a meeting between
senior economics ministers and Bank Indonesia officials.
The rupiah has been under strong pressure over the past couple
of weeks due to a combination of unstable domestic political
conditions and falling regional currencies, particularly the
Philippines peso. The local currency fell to more than Rp 9,400
per U.S. dollar this week, the lowest level since July.
Bank Indonesia had spent around US$10 million last week to
help prop up the ailing rupiah.
The rupiah was slightly stronger on Friday at Rp 9,160 per
U.S. dollar compared to Rp 9,175 on Thursday.
Dealers said the rupiah actually managed to appreciate to
around Rp 9,050 but was lower again in the afternoon due to
dollar demand for corporate foreign debt repayment.
Meanwhile, Rizal said on Friday the on-site supervision of
Bank Indonesia's officials in dealing rooms of banks operating
here was important to help curb currency speculation.
"From the information we have received, it (currency
speculation) started in Singapore and is being done by banks," he
told reporters prior to a meeting with German foreign minister
Joschka Fischer.
Rizal said the government particularly suspected foreign
banks.
"Thank God, most of them are not local players," he said.
He dismissed the notion that demand for U.S. dollar rose
because of a rise in imports of raw material and debt payments.
He said the government had studied the dollar demand and
concluded that the underlying demand for dollars remained low.
"They (currency speculators) are taking advantage of the
political conflict here," he said.(rei/bkm)