Rupiah as a commodity

Rupiah as a commodity

The Bank for International Settlements' 67th annual report
concerning the rupiah, merely reasserts a reality that has
existed in the financial market for quite some time. The rupiah
has become a profit-yielding, tradable currency. Several
prestigious financial establishments have even opened an
Indonesian desk to keep a close eye on this country.

The fact that the rupiah is now an exotic currency finds its
origin in the government's consistent monetary policy. This has
provided solid ground for speculators and others who are active
in the money market to reap profits from the rupiah as a trading
commodity.

But the rupiah's popularity in the money market has several
implications. Our monetary authority must be ready to deal with
speculators whose actions are profit-oriented. At the same time,
it must be ready to deal with actions that are aimed at
undermining its authority. The fact is that, in general, those
speculators control highly sophisticated tools for analysis and
technology as well as huge amounts of funds.

What can we do in response to such a development? First of
all, it is fundamental to strengthen our economy. Second, we must
muster the political will to respond with appropriate measures
under any circumstances. Finally, we must be careful in airing
views that can be exploited by unprincipled investors.

It is fortunate that our monetary authority has already
established cooperation with government-owned banks in several
Asian countries as a preventive measure to guard against
speculators. This will provide an effective shield in the case of
such offensives.

-- Bisnis Indonesia, Jakarta