Rupiah touches 15,000 against dollar
Rupiah touches 15,000 against dollar
JAKARTA (JP): The rupiah sank again yesterday, breaking the
15,000 level against the U.S. dollar in moderate trading before
rebounding slightly in the afternoon to end the trading day at
13,750.
The rupiah's close yesterday was 6 percent lower than
Wednesday's close at 12,900.
Currency dealers attributed the rupiah's free fall to weak
regional markets, persistent political problems at home and a
sudden rising demand for dollars by domestic commercial banks.
They said market fear over the Japanese yen's continuing poor
performance against the American dollar and a possible
devaluation of the Chinese yuan helped drag down the rupiah.
Dealers also said Bank Indonesia's (BI) move requiring
commercial banks to pay their interbank debt and trade finance
arrears by yesterday also contributed to the weakening of the
rupiah.
"There were so many factors that pushed the rupiah down
further. But I think the yen's consecutive fall played a
significant role in the collapse of the rupiah today
(yesterday)," a chief dealer with a local private bank said.
BI Governor Sjahril Sabirin shared the viewpoint that the
rupiah's sharp fall was mainly caused by the falling yen.
"The fall of the Japanese yen over the past few days forced
the rupiah to fall. There is nothing much we can do at the
moment. We can only hope that the overseas situation will
improve," he told reporters after meeting with President B.J.
Habibie at the Bina Graha presidential office yesterday.
BI director Miranda S. Goeltom said separately that if the yen
and the yuan improved, "hopefully the rupiah will also improve".
She also said that the government fiscal year-end target of Rp
6,000 per dollar may no longer be realistic.
"If you look at the current situation, it seems difficult to
achieve the target. But we don't know what kind of developments
will happen next," she said.
Sjahril said the central bank would not cut its benchmark
interest rates in the near future because it was concerned that
such a step would further weaken the rupiah.
"We have no plans to lower interest rates at the moment since
it would add pressure to the rupiah. I'm certain it would be a
risk."
Sjahril said before meeting with International Monetary Fund
officials that the central bank would not lower the rates only to
increase them again to defend the weakening rupiah.
"It would look like we were making a zig-zag policy," Sjahril
told journalists.
He said, however, that the central bank was not considering
another rate increase in the near future because it believed such
a move would no longer be effective in defending the battered
rupiah.
The Indonesian Chamber of Commerce and Industry, the banking
industry and several prominent economists have urged the central
bank to abandon its high interest rate policy since it has failed
to stabilize the ailing currency.
They also pointed out that the high interest rates had
pummeled the business sector.
The rupiah's fall prompted equity investors to take arbitrage
trading on stocks with dollar-valuation like telecommunications
firm Telkom and Indosat and tin miner Tambang Timah, which
together accounted for some 30 percent of total market
capitalization.
Most other stocks, however, lost ground.
The Jakarta Stock Exchange (JSX) Composite Index closed 3.46
points lower at 411.544, off its intraday low of 403.13 points.
The head of Sales at Bahana Securities, Bruce Rolph, said the
country's crippled financial market would continue to wither due
to soaring inflation and a contraction in the gross domestic
product.
"The overseas general view is that Indonesia is terrible,
causing more offshore funds to get rid of the local market," he
said.
He said the weakening rupiah would cause most listed companies
in Indonesia to have problems in servicing their foreign debts.
(prb/rei/aly)