State firms sell dollars to help rupiah

State firms sell dollars to help rupiah

JAKARTA (JP): Several state enterprises have, at the request
of the government, sold their U.S dollar reserves to ease
pressure on the rupiah and shore up the beleaguered local unit,
Finance Minister Prijadi Praptosuhardjo said on Wednesday.

"We've called on state firms with dollar surpluses to release
their dollars into the market," Prijadi told reporters on the
sidelines of a hearing with the House of Representatives' budget
committee.

But he did not state which state companies had sold their U.S
dollars, and how much they had sold.

The move followed Tuesday's announcement by the government and
Bank Indonesia of collaborative efforts to stabilize the local
unit.

Bank Indonesia has said that the dollar supply was thinning
out, as demand for the greenback surged lately fueled by
political concerns.

According to Prijadi, the move by state firms has increased
the dollar supply, which previously had come mostly through Bank
Indonesia's intervention.

"Dollar selling (by state firms) will be done gradually, and
continuously," he added.

But he added that no legal ruling was issued that required
state firms to sell their dollar reserves.

Separately, Coordinating Minister for the Economy Rizal Ramli
said his office and state firms would coordinate the schedule for
state companies' dollar transactions.

"We will streamline (the dollar demand) to ease pressure on
the rupiah," Rizal told reporters.

He said that state companies without immediate demand for the
dollar were asked to delay purchase.

"Up until today the development (of the rupiah) is positive,"
he added.

Following Monday's panic buying that pushed the rupiah down to
an intraday low of 11,500 to the dollar, the local unit slowly
recovered, partly due to direct intervention by the central bank.

The rupiah closed trading at 10,150 on Wednesday, climbing a
notch higher from Tuesday's finish at 10,200.

Gaining from the rupiah's rise is the Jakarta Stock Exchange
composite index, which closed higher on Wednesday at 389.19, up
0.9 percent from its 385.90 the day before.

Earlier, Bank Indonesia deputy governor Miranda Goeltom said
that companies' underlying dollar demand had subdued.

According to her, most of the corporate dollar demand to pay
for the first quarter's outstanding foreign debts of US$3.9
billion, has already been met.

She attributed Monday's dollar buying frenzy on companies
rushing to purchase the greenback for future debt servicing and
import needs.

"It wasn't speculation, it was panic buying," Goeltom said of
the rupiah's steep fall on Monday.

Meanwhile, finance director at state oil and gas company
Pertamina, Ainun Na'im said the company was always careful in
buying dollars, and refrained from panic buying.

Pertamina needs hundreds of millions of dollars every month to
finance fuel imports, Ainun said.

"We're very careful when buying the dollar, we don't want to
stir the rupiah," he told The Jakarta Post.

However, he said that Pertamina had not been approached yet by
the government to coordinate or delay its dollar purchase.

"A delay would risk the fuel supply here," he explained.

The foreign exchange market is also expecting a fresh dollar
supply from the Indonesian Bank Restructuring Agency (IBRA),
after the agency sold plantation assets at $368 million to
Malaysia's Kumpulan Guthrie Bhd.

The central bank also has reiterated it will sell foreign
exchange in a timely and controlled amount, in accordance with
market development and the central bank's capability to use its
foreign exchange reserves.

Bank Indonesia added that it would also increase the
supervision of foreign exchange transactions at banks operating
here.

But the central bank reiterated its commitment to an open
capital account, saying it has no plans to impose capital
control.(bkm)