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