Market sentiments and the rupiah

Market sentiments and the rupiah

From Rakyat Merdeka

As far as I am concerned, the value of the rupiah has
nosedived ever since President Abdurrahman "Gus Dur" Wahid
reshuffled his Cabinet, and appointed people not favored by the
market. At that time, experts and economic observers said Gus Dur
was going against the market. The market did react negatively and
the ire of the market still persists.

I am deeply concerned about the rupiah. I have been wanting to
buy a new computer, but still cannot afford to as the rupiah is
still weak. I am dreaming and hoping the rupiah will strengthen
to Rp 7,000 to the dollar. However, I think my dream will never
come true even if I wait until kingdom come.

In the 2001 state budget, the government set the rupiah's
exchange rate at Rp 7,600 to the dollar which then was adjusted
to Rp 8,000. Will the exchange rate of rupiah be pegged at Rp
7,000 to the dollar? No way. The central bank may have intervened
in the market many times and the dollar may have lost a few
points, but please do not have high hopes that the rupiah will
settle at Rp 8,000 or much more, Rp 7,000. Why? Because the
problem is psychological too. The market sentiments and response
with regard to the government's credibility is indeed difficult
to understand and unpredictable, but they need to be taken into
account.

SETIAWAN SALMIN

Jakarta