Govt, businessmen argue over ideal level for rupiah
Govt, businessmen argue over ideal level for rupiah
JAKARTA (JP): Recent advances made by the rupiah against the
U.S. dollar has left the government and the business sector
arguing over the ideal level for the currency in the economy's
present state.
The latest call for a limit to the sharp appreciation of the
rupiah came from commodity and furniture exporters, who said the
dramatic appreciation of the currency in the money markets had
presented them with a serious cash flow problem. They explained
that they buy raw materials for their exports at an assumed
exchange of over Rp 8,000 to the dollar, but export revenues are
now being realized at around Rp 7,000.
"We feel that we must remind the government to limit the sharp
appreciation of the rupiah because it will have a negative impact
on exporters, especially small and middle-sized exporters," said
Firdaus Juven, a director of PT Chempex Jaya.
Firdaus claimed that 13 other exporters had voiced similar
concerns.
"Many exporters are now unsure about whether to purchase (raw
materials) because they fear the rupiah may jump to the Rp 5,000
level," he said in statement on Saturday.
Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita caused controversy on Wednesday by saying
the ideal level for the rupiah was between Rp 7,000 and Rp 8,000.
He argued an exchange rate in that band would maintain the
competitiveness of Indonesian exports in the region.
His comments brought the recent appreciation in the rupiah to
an immediate halt and sent it sliding back to Rp 7,850 at the
close of trade on Friday, down from an eight-month high of Rp
7,050 reached earlier in the week.
Bank Indonesia Governor Sjahril Sabirin said on Friday that
the rupiah would still be able to reach a level of between Rp
6,000 and Rp 6,500 on the back of improving economic fundamentals
and renewed confidence in the country.
He stressed that a stronger rupiah would not hurt the
competitiveness of exports and said it would instead cut the cost
of raw materials for exporters.
"At a level of between Rp 6,000 and Rp 6,500, exporters will
be able to buy raw materials at cheaper prices," he said.
The rupiah has risen sharply from over Rp 11,000 last month on
the back of various factors including the strengthening of the
yen against the U.S. dollar, government dollar selling, improving
domestic economic indicators and positive remarks made by the IMF
regarding progress in the country's program of economic reform.
Bank Indonesia director Miranda Goeltom was also upbeat about
prospects for the rupiah to strengthen beyond the Rp 7,000 level
and stressed that the central bank would not restrict the
appreciation of the currency.
She said that a stronger rupiah would be beneficial to local
companies saddled with massive overseas loans. (rei)