15 September 2011
Rupiah's Depreciation Momentary Phenomenon
JAKARTA, KOMPAS.com - Chief economic minister Hatta Rajasa said the current depreciation of the rupiah is a mere momentary phenomenon due to the European debt crisis. "I am convinced it is momentary because it is not connected with our economic fundamentals," he said when met at the parliament building here on Thursday. He stated national currency depreciation against the US dollar also occurred in other countries due to worries over uncertain conditions in Europe. "We saw France for example that might meet banking problems and all European countries are having problems with the US dollar," he said. Hatta said the revision of Asian economic growth projection by the Asia Development Bank down from 7.8 percent to 7.5 percent also had affected conditions in the capital markets leading to profit-taking actions followed by purchases of the US dollar. "The ADB has revised down the Asian economic growth although Indonesia’s growth has been revised up above assumptions. What happened in the market yesterday was more of a profit-taking action followed by US dollar buying," he said.
He said the government and the central bank were able to anticipate the potential depreciation of the rupiah and had prepared policies to anticipate situation in Europe and the US. "What is important for us is not to underestimate and we have prepared response policies. I am convinced Bank Indonesia is able to control (the rupiah depreciation). Other countries’ currencies also are depreciating so this is not our exclusive phenomena. "Hatta said the situation would rebound because on the whole the rupiah was still stable supported by improving fundamental conditions of the Indonesian economy. "I believe it will rebound and seeing the whole situation the rupiah will continue to appreciate. Now it is Rp8,800 against the US dollar. Actually the rupiah condition is still quite good," he said.
The rupiah exchange rate was corrected by 50 points to close at Rp8,760 against the greenback at the Jakarta inter-bank trading here on Thursday. A market observer, David Sumual said, the central bank had intervened since Wednesday to hold the depreciation from going further down. The middle-rate of the rupiah at Bank Indonesia on Thursday was recorded at Rp8,759 down from the previous rate ofRp8,730 against the US dollar. The composite index of the Indonesia Stock Exchange on Thursday dropped 24.48 points or 0.64 percent to 3,774.56. The LQ-45 index of bluechips also dropped by 5.07 points or 0.76 percent to 659.86.
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