STRONG DOLLAR BRINGS BENEFIT TO EXPORT-ORIENTED INDUSTRY

By Andi Abdussalam

Jakarta, Sept 14 (Antara) - Against the backdrop of outcries on the US dollar's appreciation, export-oriented industry could adversely reap benefit from the greenback strengthening.          The rupiah currency which last January was about Rp13,300 per US dollar has fallen sharply, even reaching Rp14,922 (about 12.1 percent) per US dollar on Wednesday last week (Sept 5). It far exceeded the 2018 State Budget assumption set at Rp13,400 per US dollar.  Bank Indonesia's middle rupiah exchange rate was recorded at Rp14,927.           However, the rupiah's fall does not necessarily means catastrophe for the business sector in the country, as export-oriented local industry could adversely reap profit.        This  includes cottage industry which produces handicraft products and batik clothes,  or even the fisheries and agricultural sectors which produce fish and palm oil products.           Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) for Pekalongan city in Central Java, Nanggolo Wulyo Waniaji, said on Tuesday that handicraft businesses gained more benefits due to the strengthening of the greenback against the rupiah.

GOVERNMENT TO FOCUS ON STABILIZING RUPIAH

By Andi Abdussalam

Jakarta, May 26 (Antara) - The Indonesian government, through the Finance Ministry and the central bank (Bank Indonesia/BI), will do its best to stabilize the rupiah, which has from early this year continued to weaken, reaching Rp14,200 per US dollar.          Based on data from the central bank, the rupiah had lost much of its value, weakening 4.53 percent until May 21, 2018 (year to date), hitting the lowest level since 2015.          Finance Minister Sri Mulyani Indrawati promised that the government will work together with BI to overcome the weakening of the rupiah against the US dollar.          "The government, together with BI, will continue to maintain the economic stability and maintain our rupiah currency," she stated in Sukoharjo District, Central Java, on Saturday.              She noted that several strategies have been undertaken by BI to stabilize the rupiah exchange rate, one of which is by raising its benchmark interest rate.          "This step is expected to strengthen the rupiah against the US dollar, while the government will maintain the state budget discipline," she added.          BI has raised its benchmark interest 7-Day Reverse Repo Rate by 25 basis points to 4.5 percent, hoping to prop up the currency.

PEOPLE SHOULD TAKE ADVANTAGE OF RUPIAH DEPRECIATION

by Andi Abdussalam

Jakarta, May 9 (Antara) - The government and the people, especially businesses, should be able to take advantage of the rupiah depreciation that has been taking place in the past few weeks.         Despite its risky impact, the weakening of rupiah also has positive effects, which offers advantage for exports by increasing the competitive edge of local products in the global market.         For the first time since December 2015, the rupiah broke the psychological level of Rp14 thousand per dollar on Monday. It traded at Rp14,003 per dollar in the spot market. The Jakarta Interbank Spot Dollar Rate announced by Bank Indonesia (BI/the central bank) on Tuesday showed that the rupiah weakened to Rp14,036 per dollar.         The rupiah fell again by 50 points to trade at Rp14,043 per dollar in the interbank spot market on Tuesday afternoon from the previous Rp13,993.         It fell 30 points to Rp14,073 per dollar in the Jakarta interbank spot market on Wednesday morning after it closed at Rp14,043 per dollar earlier.

PUBLIC CALLED ON TO REMAIN CALM OVER RUPIAH DEPRECIATION

By Andi Abdussalam
Jakarta, Nov 30 (Antara) - The public has been called upon to remain calm following downward fluctuations of the rupiah, which has been depreciating against the US dollar, falling from Rp11,335 earlier this month to Rp12,017 on Friday morning.         "We must remain calm and continue our activities as before. The rupiah's depreciation to 12 thousand against the US dollar is mainly due to global conditions," Bank Indonesia (central bank) governor Agus Martowardojo said here on Friday.          The rupiah weakened by 133 points to Rp12,017 on Thursday evening from the previous day's position. It weakened further to Rp12,018 on Friday morning, though it strengthened again to Rp11,965 in the evening.          Finance Minister Chatib Basri said the rupiah¿s value against the Greenback was improved at the closing on Friday evening at Rp11,965 against the US dollar.          "The development of the rupiah today is relatively good, but we must remain on alert," the minister said Friday night.          He noted that the rupiah has continued to depreciate in the past few days, but the government and the central bank, Bank Indonesia (BI), increased coordination in the face of developments in the rupiah.

RUPIAH DEPRECIATION EXPECTED TO BOOST EXPORTS

By Andi Abdussalam

Jakarta, July 19 (Antara) - The depreciation of the rupiah of late which has exceeded Rp10,000 against the Greenback is expected to reduce imports and boost exports amid pressures on Indonesia's capital balance that affects current account transactions.          Finance Minister Chatib Basri said pressures on capital balance would still be taking place and it would overall affect the current transaction deficit, yet the government was making its efforts to reduce pressures on balance of current transactions.          One of the efforts made by the government in reducing the deficit of the current transaction is to reduce its fuel imports and encourage exports.          "What needs to be watched out is the capital balance. But we have settled the problem of fuels and oil and gas imports have been declining. The next step that should be made  is to boost exports," the minister said.          The rupiah exchange value on Friday morning reached Rp10,140, weakening from Rp10,060 at the closing on Thursday.          The finance minister said that the rupiah depreciation had been taking place in  the past several months due to pressures on  the capital balance.  "This happens after the Fed governor, Ben Bernanke, says he is going to scaleback its quantitative easing policy. So the main issue is more on capital balance," Chatib said.

ASEAN CONSIDERING TRANSACTIONS IN LOCAL CURRENCIES

By Andi Abdussalam

Jakarta, May 7 (NATARA) - The idea to create a single currency for the Association of South East Asian Nations (ASEAN) seems difficult to  realize soon due  in part to the different  levels of  gross domestic product among the ASEAN members and the absence of a strong institution to deal with threats in the financial sector.          Yet, conducting trade transactions using local currencies within the region is another choice that could be implemented to avoid risks that might arise when using a third party currency like the US dollar.          Finance Minister Agus Martowadojo said the 10 ASEAN members + 3 (Japan, China, South Korea) will consider the use of local currencies in making trade transactions among member countries.          "We also discussed efforts to encourage the use of local currencies in trade transactions, namely the local currency in respective country. This would be effective in the trade transactions within  ASEAN members or in the trade between ASEAN states and China, Japan and South Korea. We are still discussing this matter," the finance minister said.          As preparations for the realization of this idea, the central banks of ASEAN countries and those of the three partner states are now studying the possibility of implementing a bilateral swap agreement.         "The bilateral swap agreement will be implemented using local currency, for example between Indonesia and Japan, Indonesia and China and Indonesia and South Korea.  Ideally, the central banks of these countries should work together and study the possibility of the implementation of a bilateral swap agreement," the minister said.          According to the ASEAN Secretariat's website, finance ministers from China, Japan, South Korea and ASEAN have several years ago agreed to expand their system of bilateral currency swaps under the Chiang Mai Initiative to a more multilateral system.          The ministers, meeting as the "ASEAN-plus-3" on the sidelines of the Asian Development Bank (ADB) annual meeting in Istanbul, said this would make the Chiang Mai Initiative a "more effective and disciplined framework."     Under the currency swaps, an Asian country hit by a foreign exchange crisis like the one in 1997 could borrow foreign currency -- usually US dollars -- from another country to bolster its reserves until the crisis had passed.          According to Pedro Paez Perez, former minister for economic policy coordination of Ecuador,  the formation of regional monetary could increase coordination of monetary policies among states and help prevent currency fluctuations.          "Cooperation of among states in the region could prevent them from unnecessary debts and could develop their own natural resources to increase the working productivity of their people," he said.         He said that Asian countries need to stabilize their regional currencies and set up multilateral loan agency such as the one done by Latin American countries.         "Countries in the South need to do this so that they would no longer depend on the economic system of the Western Countries," he said in Jakarta on Thursday.         In this case, ASEAN needs to stabilize its local currencies for trade transactions, including  the utilization of the currency swap facility.         The use of local currencies in trade transactions could minimize risks compared with using a third party currency such as the US dollar. Thus,  the plan of ASEAN members to use local currencies is a good breakthrough.          "I think this is a good breakthrough and this needed to be followed up. If we use the third party currency in conducting trade transactions the value can usually change, thus risks can emerge," Finance Minister Agus Martowardojo said.          However, the minister could not yet assure when the local currencies would be realized because it still needed optimal preparations and popularization. "Maybe it is still a long way to go. It would still be discussed at the deputy prime ministerial level in the first place. Yet, if all have the commitment, it could be realized soon," the minister said.          At least this could be implemented before hand, before a single currency is created.          Virtually, ASEAN has a good prospect for a single currency  like the euro by the European Union, as the regional association's trade has been accumulating hundreds of millions of US dollars each year.          Diponegoro University economist Nugroho SBM said that  ASEAN remains an important geopolitical and economic power in Asia, and even in the world, and therefore  a single currency will strengthen  it against pressure from the US dollar for instance.          With ASEAN having a single currency, he said, the strong effect of the US dollar in that part of the world would be sterilized and thus strengthening the monetary position of the ASEAN countries.          "Indeed, it would take a very long time.  The European Union alone needed 60  years before agreeing to use the euro  as a single currency, bit it would be better to discuss the foundation of an ASEAN  single currency from now on," he said.           He said Indonesia, Malaysia, Singapore, Thailand, and the Philippines may serve as a driving power for the formation of a single currency because they have a dominating trade volume among the ASEAN member countries, he said.***5*** (T.A014/A/HAJM/23:00/H-YH) 07-05-2011 23:00:5

BI'S CALL FOR DOLLAR SELLING A GOOD OR BAD SIGNAL?

By Andi Abdussalam

        Jakarta, Nov 19 (ANTARA) - Bank Indonesia (BI)'s appeal to the public to sell their dollars in order to help offset the rupiah depreciation may prove to be counterproductive and encourage market players to adversely hunt the greenback, observers say.

        BI made the call so that those keeping dollars would enjoy a gain from the margin as now the rupiah has reached its lowest level of Rp12,000 per US dollar.

        "The people will not sell their dollar only because they could already enjoy a high gain. The BI call could adversely lead people to keep their dollars and wait for higher gains," Dradjad Wibowo of Commission XI of the House of Repesentatives (DPR) which deals with financial affairs, said here on Wednesday.

        He said that the BI statement could serve as a signal that BI's role as monetary authority began to weaken. "In a war there is no room for weakness," Wibowo said

        Dradjad Wibowo's opinion was supported by Bambang Soesatyo of the Indonesian Chamber of Commerce and Industry (Kadin).

        "We could understand the BI appeal which was aimed at creating mutual benefits among the dollar keepers and the BI because it could increase the central bank's reserves but it was announced not in the correct time," he said

        He said that Bank Indonesia (BI)'s call on the public to release their US dollars was a bad signal and counterproductive because it would trigger speculative buying of the currency.

        "This afternoon, capital owners increased their dollar hunting activity in anticipation of the worst impact of the rupiah's depreciation," Bambang Soesatyo said.

        The rupiah fell to Rp12,000 per US dollar on Wednesday afternoon after perching at a level of between Rp11,500 and Rp11,900 for a while, following mounting market pressure.

        The rupiah in the Jakarta interbank spot market traded at Rp12,000/12,028 per US dollar, down 75 points from Rp11,925/12,100 in the market's closing a day earlier.

        The Kadin official said that BI, in its capacity as the central bank, should not make a statement calling on the public to release their dollars because the local and international markets were facing US dollar scarcities.

        The BI call could be construed that the present rupiah exchange rate at between Rp11,000 and Rp12,000 against the greenback had reached an equilibrium point in the current financial crisis.

        "This means that now is the time for dollar keepers to take a profit because the rupiah depreciation has already reached its peak. But the fact explains to us that the BI call is an indication that BI has panicked because its foreign exchange reserves began to be running short," he added.

        BI's foreign exchange reserves have dropped to US$50.5 billion from US$60 billion in July after it has intervened in the market to neutralize the drop of the rupiah.

        Economic observer Tony A Prasetyantono said the BI call would not be effective to withstand the downturn in the rupiah value.

        "The appeal is not effective but as BI governor, Boediono has the moral obligation to ask the people to sell their dollars," he said.

        BI at present is facing a disadvantageous situation because its efforts to carry out continuous market intervention would deplete its foreign exchange reserves which in the present level had been on the brink of a critical condition.

        He said that what was needed now was not a monetary maneuver but a blanket guarantee. "This would be effective in offsetting the rupiah's fall," Prasetyantono said.

        In the meantime, state-owned BNI chief economist A Tony Prasetyantono said the BI call was actually a step to influence the market conditions.

        "However, I am convinced that BI was aware of the ineffectiveness of its call. However, the BI governor must do it because he already had tried other ways but the rupiah still continued to weaken," he said.

        BI has taken several steps such as raising its benchmark interest rate and carrying out market intervention at the risk of its declining foreign exchange reserves.

        However, Bambang Soesatyo of Kadin hoped that BI would lower its benchmark interest rate (BI Rate) so that the existing commercial banks would prepare to lower their interest rates to boost the provision of working capital credits and ignite investment.

        Besides, BI needs government assistance in the form of a blanket guarantee. Unluckily, the government is still refusing to provide it for banks' deposits, he added.

        Bank BRI Director Sulaiman Arif Arianto said meanwhile that the BI call was an appropriate step, though it was actually ineffective.

        "In the current situation BI has taken the correct step because it serves not only as a rigid monetary authority but also as an institution trying its best to educate the people," he said.(T.A014/HNG/A/H-YH)   (T.A014/A/A014/A/H-YH) 20-11-2008 00:01:30