Stabilizing the rupiah

Stabilizing the rupiah

News that the government is planning to study a number of
foreign exchange control options, and expectations that any
option chosen will be consistent with regard to pursuing its Bank
Indonesia liquidity aid (BLBI) policies, has helped to strengthen
the rupiah. Aside from economic considerations, the country's
internal political situation also acts as a barometer by which
the government's credibility is measured.

As soon as the reform wave began sweeping the nation, many
groups, acting in the name of "the people", staged demonstrations
at parliament or elsewhere, and though their demands have often
been vague, the impact of the demonstrations was tangible enough.
Among other things, the exchange rate of the rupiah went
fluctuating and prices of essential commodities soared.

Obviously, the stability of the rupiah depends a good deal on
the credibility of the government. Since it cannot be denied that
the morals of individual bureaucrats help to determine the depth
of this credibility, existing suspicions of moral degradation
should be given our collective attention. Civil servants whose
duty it is to look after the needs of the people should be able
to refashion old habits.

We support the government's actions as long as they are
realistic, well considered and relevant. The public's hope
appears to be for the government to be able to put in place some
effective foreign exchange controls in the near future. By so
doing the target of fixing the rupiah's rate at Rp 10,000 per
U.S. dollar could well be achieved.

-- Bisnis Indonesia, Jakarta