ID :
17819
Tue, 09/02/2008 - 18:57
Auther :
Shortlink :
http://m.oananews.org//node/17819
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HIGH INFLATION RATE MAY PROMPT BI TO INCREASE ITS RATE: OBSERVER
Jakarta, Sept 2 (ANTARA)- The annual inflation rate which has reached 11.5 percent will prompt the Indonesian central bank (Bank Indonesia/BI) to once again raise its benchmark interest rate (BI Rate) which at present is 9.0 percent, an economic observer said.
"BI will once again raise its rate by 25 basis points to 9.25 percent in an effort to curb the upward trend in inflation that has exceeded the government's target at 11.2 percent," Edwin Sinaga said here on Tuesday.
He said that the increase in the BI Rate was expected to encourage foreign investors to place their funds again in the Indonesian money markets.
"So far, many foreign investors have withdrawn their funds and invested their money n other markets which are more profitable," he added.
Sinaga said that the rise in the BI Rate was also expected to help improve the rupiah exchange rate after it had plunged in he last several days to a level almost reaching Rp9,200 a US dollar.
He said that BI would likely try its best to maintain the rupiah rate at below the Rp9,200 rate per dollar by releasing its dollar reserves.
"We predict that BI will intervene in the market by releasing its dollar currency reserves in order to protect rupiah from falling too far," he added.
He said that the rupiah would be at a secure position if its rate could be maintained at between Rp9,150 and Rp9,175.
Sinaga said that the rupiah exchange rate which had reached Rp9,195 as a result of the inflation rumors had caused a serious concern.
He said that inflation would reach 12 percent due to various negative factors taking place at home.
According to Sinaga, the fuel oil price hikes last May no longer had effect on the inflation. "What matters now which affects inflation is the increase in the price of liquefied natural gas," he added.
"BI will once again raise its rate by 25 basis points to 9.25 percent in an effort to curb the upward trend in inflation that has exceeded the government's target at 11.2 percent," Edwin Sinaga said here on Tuesday.
He said that the increase in the BI Rate was expected to encourage foreign investors to place their funds again in the Indonesian money markets.
"So far, many foreign investors have withdrawn their funds and invested their money n other markets which are more profitable," he added.
Sinaga said that the rise in the BI Rate was also expected to help improve the rupiah exchange rate after it had plunged in he last several days to a level almost reaching Rp9,200 a US dollar.
He said that BI would likely try its best to maintain the rupiah rate at below the Rp9,200 rate per dollar by releasing its dollar reserves.
"We predict that BI will intervene in the market by releasing its dollar currency reserves in order to protect rupiah from falling too far," he added.
He said that the rupiah would be at a secure position if its rate could be maintained at between Rp9,150 and Rp9,175.
Sinaga said that the rupiah exchange rate which had reached Rp9,195 as a result of the inflation rumors had caused a serious concern.
He said that inflation would reach 12 percent due to various negative factors taking place at home.
According to Sinaga, the fuel oil price hikes last May no longer had effect on the inflation. "What matters now which affects inflation is the increase in the price of liquefied natural gas," he added.
