Joint intervention to shore up rupiah temporarily halted

Joint intervention to shore up rupiah temporarily halted

By Devi M. Asmarani

KUALA LUMPUR (JP): Indonesian Finance Minister Mar'ie Muhammad
said here yesterday that joint intervention with Singapore and
Japan to prop up the rupiah has been temporarily suspended.

Speaking at the end of the two-day meeting of the finance
ministers of the nine-member Association of Southeast Asian
Nations (ASEAN), Mar'ie said that the joint intervention had
temporarily been stopped.

"I think, for the time being, we will not intervene against
the market," Mar'ie told journalists following the meeting, which
also had participants from Australia, China, Hong Kong, Japan,
South Korea and the United States.

He said in the present situation where the regional market was
very volatile due to the impact of South Korea's monetary
difficulties, the intervention would not be effective.

Mar'ie said that the joint intervention could be pursued in
the future, especially after the market turmoil in South Korea
had become calmer.

The Monetary Authority of Singapore and the Bank of Japan have
recently bought rupiah on behalf of the Indonesian central bank,
Bank Indonesia, to shore up the currency.

Japanese Vice Finance Minister Eisuke Sakakibara confirmed
that the Bank of Japan had jointly intervened to shore up the
rupiah, saying that the practice was the first made outside the
Group of Seven (G-7) developed countries.

"When there is an appropriate time, we may intervene again.
Our intervention some time ago was successful," Sakakibara said.

In Jakarta, the rupiah fell to a day low of 3,840 against the
greenback yesterday before settling to 3,815/35 at the close.

"The rupiah is not the only currency falling now. So are the
Malaysian ringgit and the Thai baht," Mar'ie said. "Even the
Japanese yen fell to 128 and the Korean won had long broken the
psychological barrier of 1,000 to 1,240," he added.

The minister said that the uncertainty in the regional
currencies were caused by the uncertainty regarding the IMF
bailout program for South Korea.

Mar'ie also denied that the persistent drop in the rupiah
against the U.S. dollar was due to conflicting statements made by
Indonesian officials about the use of bilateral aid from
Singapore.

The recent meeting between President Soeharto and Singapore
Prime Minister Goh Chok Tong had clarified the matter, he said,
adding that the government would not use the funds to bail out
the private sector's debts as feared.

Indonesia received a US$23 billion bailout brokered by the
International Monetary Fund and more than $15 billion in
bilateral aid packages from Japan and several other countries.

Speaking to Indonesian reporters covering the meeting, Mar'ie
again stressed that the government would never use the IMF-led
financial aid to bail out ailing Indonesian companies.

The minister said that the private sector should not rely on
the government in dealing with their mounting offshore loans.

"The government shows the way how to cope with their debts.
But private companies should have their own initiatives how to
solve their debt problems," he said.

He said that private companies should talk directly to their
creditors if they wanted their debts to be rolled over.

The minister promised that the government would help the
private sector to lobby their lenders to roll over their debts.
"But for sure, the government will not help them with money to
pay their debts," he added.

Bank Indonesia's managing director Paul Sutopo Tjokronegoro
said last week that at least 40 percent of private short-term
foreign debts due for repayment by March next year might be
rolled over.

He said that the rollover of the private debts followed
lobbying by the Indonesian government with Japanese creditors.

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