Govt, BI collaborate to stabilize rupiah
JAKARTA (JP): The government and Bank Indonesia agreed here on Tuesday to cooperate in defending the ailing rupiah amid concerns over the escalation of political discord in the country.
Coordinating Minister for the Economy Rizal Ramli said the government and the central bank had outlined a number of joint efforts to bolster the currency.
Rizal, however, did not elaborate on the type of action that would be taken to shore up the currency, which plunged to a 30- month low on Monday.
"Just watch how it (the cooperation) works out in the market," he said in a press conference held jointly with the central bank's officials.
The planned collaboration comes amid fears that the rupiah is heading for another free-fall which will lead Indonesia into a second economic crisis.
The rupiah breached its 30-month low of 11,500 against the U.S. dollar during trade on Monday afternoon, as thousands of students demanded President Abdurrahman Wahid's resignation.
According to Rizal, with the help of the government, central bank intervention would be more effective in protecting the Indonesian currency.
He warned currency speculators from getting "burned" if they planned to capitalize on the deteriorating political conditions.
"I recommend buying the U.S. dollar at 15,000, but if anyone suffers losses don't blame me," he said.
He refused to explain how the government would punish currency speculators, saying that it was a "kitchen secret".
Rizal said that the country's macro-economic indicators remained on the right track, with the inflation rate showing signs of a decline.
Central Bureau of Statistics (BPS) chief Soedarti Surbakti estimated that inflation for March could hit 1 percent, up from last month's 0.87 percent.
She said a weaker rupiah and the announcement of plans to raise fuel prices by April had driven prices up.
Nonetheless, Rizal was upbeat that inflation rates would fall.
Bank Indonesia deputy governor Miranda Goeltom said, if necessary, under the joint effort the government might ask state firms to delay the purchase of U.S. dollars.
"Our observations indicate that there is a (U.S. dollar) demand from several parties. If they can delay the demand, it will be good for the rupiah," Miranda said.
She said, for the first quarter of this year Indonesia's outstanding foreign debts stood at about US$3.9 billion.
Of that amount, $2.1 billion is owed by foreign companies in which the payments are the concern of their respective headquarters, she explained.
Miranda added that another $1.3 billion in debts were owed by local companies, most of which had already purchased dollars for the debt payment.
According to her, there is little underlying corporate demand for the U.S. dollar left, yet many companies had gone into a panic on Monday regardless.
The rupiah on Tuesday gained some ground, closing at 10,200, up from Monday's 10,500.
On the stock market, the Jakarta Stock Exchange composite index continued its fall, closing at 385.90, down 2.7 percent from its opening at 396.61.
Separately, the Indonesian Bank Restructuring Agency (IBRA) said it would soon sell $368 million which it raised from the sale of its plantation assets to Malaysian companies.
IBRA said the sale of 24 palm oil plantations formerly owned by the Salim Group to the Malaysian plantation firm Kumpulan Guthrie Bhd had been concluded.
The deal marks IBRA's second-largest deal following the sale of its stake in automaker PT Astra International to Singapore's Cycle and Carriage in March last year. (bkm)