The search for dollar profit: A tale of two cities

By Stevie Emilia and Tedy Novan

JAKARTA (JP): "Hurry up, change all your dollars into rupiah now or you will suffer a great deal. The rupiah's value is strengthening..." a man on a cellular phone said at a Gunung Agung money changer here.

He was in a long line with scores of people looking to get the most from their savings.

The currency turmoil has seen most people suffer -- but a few have profited, intentionally or otherwise.

In Central Jakarta, Kartika Soebandri, a housewife and a mother of three, was one of the lucky ones who saved her family in the rush.

"I'm only a housewife, I don't have time to follow each new report about the currency crisis. But I was told by my brother, who works in a private bank, to exchange my savings into dollars," said Kartika, a senior high school graduate.

She was at first reluctant to do so, she said, because she had never had dollars before. She decided to make time to look at the news.

"When I read in the newspapers about the continuous decline of the rupiah, I followed my brother's advice," said Kartika.

She exchanged all her savings into dollars, when the greenback was still about Rp 4,000.

"I was only thinking how I could keep making ends meet. My husband is only a government employee, and all my children are still at school." said Kartika.

Her husband was at first angry at her for not consulting him before taking such a step.

"He said I was a fool because he believed the rupiah's value would increase," said the 38-year-old woman.

When the rupiah dived to Rp 10,000 against the dollar, she was again advised by her brother to sell some of her savings.

"My husband was finally grateful... our savings have almost tripled," said Kartika.

She still keeps a few dollars in reserve, "just in case the rupiah falls again".

In Yogyakarta, Mrs. Said, a 43-year-old housewife from Riau, also said she never paid attention to currency trading, and had followed the advice of her son. The family had plans to send the second of their five children to study overseas.

"Although the dollar has a higher rate than usual, I was compelled to buy US$5,000," said Mrs. Said, the widow of a government employee.

IMF

Her savings doubled, and now she follows the news every day about the value of the rupiah, the President's health and market analyses.

But she miscalculated the effect of the IMF deal with the government, thinking the rupiah would strengthen but the opposite happened.

"I lost, but only $3,000," she said.

The avid reader of The Economist and Business Week acknowledged she was profiting from the situation, but said "the government and conglomerates are also to blame for messing up the economy".

She recently sold $300,000 and managed to renovate her house. "I got 10 times my original value," said the high school graduate with a smile.

Mrs. Said now makes an average of three transactions a week, depending on the exchange rate.

Kartika, Mrs Said and others who thought they were doing the right thing may be surprised by the recent announcement by the Indonesian Council of Ulema, that dollar-speculating was haram (forbidden by Islam).

These included Handayani, a private bank employee in Bendungan Hilir, Central Jakarta, and a chairperson of a foundation for the mentally handicapped.

Home

Handayani was also a hesitant participant in the rush to buy dollars. She exchanged all her savings into dollars following the closure of 16 private banks last November.

"I was afraid I would lose my job," said the employee, who bought U.S. currency at a rate of Rp 5,000.

"I didn't have huge savings even after working for more than five years. And they were effectively getting smaller day by day with the depreciation (of the rupiah)," said Handayani, who declined to reveal how much she had saved.

Her plan to buy a dream house was coming increasingly under threat.

When the dollar reached Rp 10,000, she decided to buy rupiah, insisting she only exchanged as much as she needed for the house.

Apparently she was disturbed by reports of people profiting from the high dollar rate, as if she would be labeled among those oblivious to the suffering of others around them.

"It was hard to decide whether to keep the dollars or to exchange them into rupiah at the time of the crisis," Handayani said.

Now Handayani feels more secure.

"If I lose my job at least I've got the house."

She says she is still "amazed" that she got her dream house in a such short time, and that the remainder of her savings, which has doubled, remain substantial.

The crisis has also brought fortune to a foundation for mentally disabled children in South Jakarta.

The 83-year-old chairwoman was worried about the distressing currency reports, so she had the treasurer take $1,000 out of the foundation's deposit account and exchange it into rupiah.

"We had no intention to take advantage of the rush," the treasurer said, explaining that the $1,000 was money that would not usually have been exchanged in such circumstances.

"We faced difficulties in raising funds, and we had to pay the teachers' Idul Fitri allowance," she said.

The decision was taken earlier this month, when the dollar's selling rate was Rp 6,890.

Thanks to the shrewd chairwoman, all the foundation's teachers can enjoy their hard-earned Idul Fitri holiday.