Sjahril upbeat about rupiah
Sjahril upbeat about rupiah
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on
Tuesday that the rupiah would continue to strengthen until the
end of the year amid signs of improvements in the economy.
"I'm optimistic that the rupiah will at least hold at the
current level," he told reporters following a meeting with
President B.J. Habibie.
He explained that various factors, including politics would
continue to cause fluctuations in the exchange rate against the
U.S. dollar, but the increasing credibility of the government's
economic reform program and signs of improvement in the economy
would offset any negative factors.
The country is scheduled to hold a special session of the
People's Consultative Assembly (MPR), the country's top policy-
making body, from Nov. 10 to Nov. 13 to set the date for next
year's general election and adopt other measures to accelerate
the democratization process.
"There will still be fluctuations... but the trend toward a
steady appreciation of the rupiah is there," he said.
The rupiah has appreciated by about 40 percent since late last
month.
The currency remained flat at Rp 7,400 to the dollar on
Tuesday; dealers said there were few fresh incentives in the
market.
Sjahril declined to give any ideal level for the currency,
saying, "I don't have an ideal target. If it (the rupiah) can
hold on to the current level I'll be happy, and if it can
strengthen a little more I will be even happier."
Sjahril said last week that the rupiah could strengthen to
between Rp 6,000 and Rp 6,500 by the end of the year.
The government had earlier targeted the currency to be at Rp
10,000 by the end of the year.
Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita made a controversial statement last week
when he said that the ideal level of the rupiah was between 7,000
and 8,000 to maintain the country's export competitiveness.
The comment caused a sharp reverse in the upward trend in the
currency on Thursday but the rupiah has since strengthened again.
Sjahril said that a further strengthening of the rupiah from
the current level would hurt exporters only temporarily as they
would gain in the longer term from cheaper imported raw
materials.
Sjahril also denied a newspaper report that the central bank
was planning to reintroduce a trading band for the rupiah once
the currency reached a certain level.
"We have no plans in that direction. With the current system,
the rupiah has managed to strengthen and hopefully it can
strengthen further," he said.
The government abandoned the trading band in August last year
after a massive amount of the country's forex reserves were used
up trying to keep the rupiah in the targeted trading range.
Sjahril, however, added that the central bank was studying
various alternatives to the current free float system.
He also said that Bank Indonesia would continue to improve the
country's forex monitoring system, including by improving the net
open position of commercial banks.
Separately, the central bank announced on Tuesday that
Indonesia's net international reserves increased by US$64.9
million to $13.9 billion in the week ending Oct. 23 from $13.8
billion in the previous week.
The increase resulted from foreign loan disbursements and
foreign exchange revenue from the export of oil and natural gas,
the central bank said in a statement.
It added that the reserve level was above the $11.67 billion
minimum level set by the International Monetary Fund. (rei)