To ward off speculators

To ward off speculators

From Bisnis Indonesia

Efforts to strengthen the rupiah, and at the same time to strike at dollar speculators, can be easily made if the authorities wish to do so.

Consider why speculators buy up dollars. They hope for big profits when selling their dollars.

What if there is no one to buy high-priced dollars? Speculators will immediately refrain from making transactions.

How to exert pressure on buyers? By shattering the speculators' expectations:

* Bank Indonesia should determine a fixed buying rate, for example US$1 = Rp 4,000.

* The finance minister should instruct all banks and money changers to adhere to the buying rate.

* Penalize banks and money changers which buy dollars at a rate higher than Rp 4,000.

Selling rates may fluctuate, but the buying rate would be fixed. This would make currency dealing unattractive to speculators.

BRATA WARDHANA

Jakarta