Try says forex ethics important

Try says forex ethics important

JAKARTA (JP): Vice President Try Sutrisno called on local
foreign exchange (forex) dealers and bank managers to respect the
code of conduct in their money market transactions.

When opening the 17th Asia Pacific Forex Assembly here
yesterday, Try also made an appeal to forex dealers and bank
managers to uphold business ethics in all dealings.

Try acknowledged that forex dealers of banks generally conduct
their transactions on the basis of a profit target set by their
top management.

"This has sometimes led the dealers to disregard business
ethics and social responsibility, which should always be
respected by everybody in the business, including the top
management," he said.

In their efforts to make Indonesia one of the international
financial centers, he said, Indonesian forex dealers must
continue to consistently follow the rules, including the code of
conduct approved by the Association Combiste Internationale.

Indonesian dealers do not have their own code of conduct yet.
Currently, Bank Indonesia (the central bank), in cooperation with
the Forex Club Indonesia, is designing a code of ethics.

Try said Indonesia should cater to the tremendous financial
growth in the Asia-Pacific. This growth has prompted considerable
increases in financial transactions between region's countries,
as well as between the region and the rest of the world.

Quoting results of a survey, Try said foreign exchange
dealings currently amounted to US$1.2 trillion per day, compared
with $880 billion per day recorded in 1992.

Perception

The Vice President also called on forex dealers to be more
cautious in drawing conclusions about any country's conditions as
their perceptions influence the direction of the international
money market.

"A negative perception of a country's foreign exchange
position, or its economic or political conditions, can easily
cause a fall in its exchange rate, irrespective of whether the
perception is based on reliable information or mere rumors," Try
told 700 local and foreign forex dealers and bank managers.

Because international money market developments can have far
reaching repercussions as a result of forex dealers' perceptions,
Try said, it is imperative that central banks work closer
together to influence exchange rates.

"It is impossible for a central bank to mitigate the
fluctuations in its foreign exchange rate on its own," Try said.

Supporting Try's argument, Governor of Bank Indonesia J.
Soedradjad Djiwandono said central banks in the Asia-Pacific
region had concluded an agreement in Hong Kong recently to
cooperate in fighting possible speculative attacks.

Speaking at yesterday's assembly, Soedradjad noted that the
task of maintaining currency stability is becoming more difficult
regarding instability which might occur due to speculative
attacks on the currency.

He said the government would continue to maintain macro-
economic stability both through prudent fiscal and monetary
policies, as well as through realistic exchange rate policies.

"The central bank wants financial stability. Financial market
players, however, don't want it as they say it makes for a dull
market," Soedradjad said.

In bridging its investments-savings gap, Soedradjad said, the
government would continue to invite foreign capital inflow
through direct and portfolio foreign investment.

The government will not issue debt instruments to close the
gap, Soedradjad said. It remains concerned about the level of
foreign participation in its debt market.

This does not mean that the domestic debt market will not grow
because the government will continue to assign state-owned
companies to issue bonds to stimulate domestic bond markets, he
said.

It is expected that rupiah commercial papers issued by a
number of state-owned and also leading privately-run companies
will eventually create a benchmark for bond issuances from
Indonesian companies, Soedradjad said. (rid)