The risk and reward of being an amateur currency trader

By Tedy Novan

YOGYAKARTA (JP): Yogyakarta's money changers are seeing newcomers in currency trading. Busy sites include PT Baruman Abadi at Hotel Garuda, Bank Dagang Negara and Bank BNI.

Ridwan, 27, a tourist guide and a graduate of Gadjah Mada University and the IAIN Sunan Kalijaga Islamic College, is a seasoned trader.

He has been in the currency business since 1988. "That's how I paid for my studies," says Ridwan, who also sells souvenirs along Jl. Malioboro. "I got my initial capital from a foreign tourist," says the Yogyakarta-born man.

A farmer's son who started earning his living in the streets, the guide and handicraft trader has made many contacts with foreign tourists and has seen his dollar savings grow.

"Although profits were small in the exchange business at the time, it was at least 20 percent more than what I made selling handicrafts," says Ridwan, who has two children.

Ridwan obtains information on the rupiah's movement at hotels and banks and avidly reads Time and Business Week.

In his work as a guide, he says he became more knowledgeable about exchange rates. He pursues the highest rates in Jakarta and Bali.

"I'm mostly in Bali where the rates are higher," he says. "When in Bali I trade in relatively high amounts, usually above US$10,000."

In Yogyakarta, Ridwan deals in smaller amounts, about $500, but once he handled a transaction of $25,000. He only makes three or four transactions a month, depending on his needs.

The main thing is to save money for a rainy day, he says.

Nowadays, he says, "tourists are getting smart". They no longer pay in dollars to souvenir traders who used to accept their currency, but now get a lot more for their money.

This has led to fewer profits for Ridwan. But luckily his work as a guide brought him into contact with a garment trader from Singapore.

The man entrusts him to make dollar transactions in Indonesia. "It's good business. One transaction amounts to between $15,000 and $25,000," Ridwan says.

Foreign exchange transactions are good for quick profits, he says.

Seconds

"It depends on someone's ability to read the market situation." Ridwan makes good use of his experience as a trader and guide to observe foreign exchange movements.

"All trade is the same in principle. Things are decided in a matter of seconds," he says. "Up to now I have not suffered big losses," says Ridwan, who also makes deals at star-rated hotels.

With the steep increase of the dollar's value, "my dollar savings aren't enough to prepare for my children's future," he says without revealing the amount of his savings.

Ridwan says he is cautious in conducting transactions.

"I take into account market risks, especially with regard to politics or possible social upheavals," he says.

He does not trust measures recently taken by the government, like the "Love Rupiah" drive and the IMF-Indonesia agreement on reforms.

"The proof? The rupiah continues to weaken," he says.