Government vows to guard rupiah, says minister

JAKARTA (JP): The government will not set artificial targets for the rupiah but will intervene in extraordinary circumstances to save it from falling further, Minister/State Secretary Moerdiono said yesterday.

Speaking after an unscheduled meeting with President Soeharto, Moerdiono ensured that the government, despite the ongoing currency crisis, would maintain its free foreign exchange regime.

"And secondly, we don't want to cap our currency. What is important is how to make the rupiah move more properly ... to help the private sector calculate and plan," Moerdiono told reporters after the meeting.

Bank Indonesia Governor J. Soedradjad Djiwandono, Minister of Finance Mar'ie Muhammad, Minister of Industry and Trade Tunky Ariwibowo and Director General of Tax Fuad Bawazier also attended the meeting.

The rupiah fell to a new historic low of 3,850 to the U.S. dollar at midday before stabilizing in late trade to close at 3,710/25 against the opening of 3,725/35.

The rupiah has plunged 35 percent against the dollar since early July, with most of the tumble occurring after the government floated the currency in mid-August.

Moerdiono said the government would not intervene in an effort to prop up the rupiah because it would be pointless. The government should only control it in extraordinary circumstances, he said.

He also said the President had called for cooperation between the government, the private sector and banks to deal with the country's monetary crisis.

Moerdiono said the private sector's cooperation was essential because its role in the economy had grown substantially in recent years.

"The private sector has made a huge contribution to our development and economic growth in the past few years. Therefore, in handling the currency crisis, we also need tight cooperation with the private sector and banks," he said.

Moerdiono said the government alone would not be able to solve the crisis. He contended that the monetary woes were still continuing even though the government had taken measures that it believed would end the crisis.

The minister said the government wanted to call on the private sector, particularly those holding short-term foreign loans, to arrange their debt payments in cooperation with the government and banks to prevent a dollar rush.

On the part of the government, Moerdiono said, it would continue to take measures to ensure that the economy was running despite the crisis.

"Maybe in the coming days, the community will be informed about further steps that will be taken by the government," he said. (rid/prb)