ID :
23076
Tue, 10/07/2008 - 13:25
Auther :
Shortlink :
http://m.oananews.org//node/23076
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RUPIAH SHARPLY DROPS TO RP9,700 PER DOLLAR ON TUESDAY MORNING
Jakarta, Oct. 7 (ANTARA) - The rupiah sharply dropped to Rp9,700 per dollar in the Jakarta interbank spot market on Tuesday morning because market players were still actively buying US dollars driven by concern about the global economic turmoil.
The rupiah traded at Rp9,700/9,710 per dollar on Tuesday morning compared to Rp9,555/9,570 per dollar the day before, down 145 points.
The continued weakening of the rupiah had been expected earlier because the market was still in panic over the world financial crisis , money market observer Edwin Sinaga said here on Wednesday.
Market players bought huge amounts of US dollars in an effort to save the funds they had sunk in the domestic markets, he said.
The foreign outflow was the main factor pudhing down the rupiah. The local unit is even predicted to weaken to Rp10,000 per dollar at the end of this month.
Therefore, the market hoped that Bank Indonesia (BI), the central bank, would anticipate the further decline in the rupiah and deal with it, he said.
BI most likely will raise its key interest rate or the BI Rate to cope with the inflation, which continued to get stronger, and to stop the continued weakening of the rupiah.
The central bank had actually attempted through various instruments, to correct the rupiah, however, the Indonesian currency remained under market pressure, he said.
The present high inflation rate is the major consideration for BI to soon raise its BI Rate by 25 basis points again to become 9.5 percent, although a number of analysts had urged BI to maintain its key rate.
"We are optimistic that BI will again raise its BI Rate by 25 basis points to hold the market's pressure against rupiah," he said.
Meanwhile, Eric Sugandi, a Standard Chartered Bank economist, said that the current global financial crisis would not significantly affect Indonesia's economic growth.
However, money market players were worried about the rupiah's fluctuations which continued to drop. The rupiah might continue to weaken until it would reach a level of Rp10,000 per dollar, he said.
He said Indonesia's net exports were only 10 percent of its total gross domestic product, so, the impact of the world financial crisis would not be significant.
However, the rupiah plunged due to the market's panic, he said.
The rupiah traded at Rp9,700/9,710 per dollar on Tuesday morning compared to Rp9,555/9,570 per dollar the day before, down 145 points.
The continued weakening of the rupiah had been expected earlier because the market was still in panic over the world financial crisis , money market observer Edwin Sinaga said here on Wednesday.
Market players bought huge amounts of US dollars in an effort to save the funds they had sunk in the domestic markets, he said.
The foreign outflow was the main factor pudhing down the rupiah. The local unit is even predicted to weaken to Rp10,000 per dollar at the end of this month.
Therefore, the market hoped that Bank Indonesia (BI), the central bank, would anticipate the further decline in the rupiah and deal with it, he said.
BI most likely will raise its key interest rate or the BI Rate to cope with the inflation, which continued to get stronger, and to stop the continued weakening of the rupiah.
The central bank had actually attempted through various instruments, to correct the rupiah, however, the Indonesian currency remained under market pressure, he said.
The present high inflation rate is the major consideration for BI to soon raise its BI Rate by 25 basis points again to become 9.5 percent, although a number of analysts had urged BI to maintain its key rate.
"We are optimistic that BI will again raise its BI Rate by 25 basis points to hold the market's pressure against rupiah," he said.
Meanwhile, Eric Sugandi, a Standard Chartered Bank economist, said that the current global financial crisis would not significantly affect Indonesia's economic growth.
However, money market players were worried about the rupiah's fluctuations which continued to drop. The rupiah might continue to weaken until it would reach a level of Rp10,000 per dollar, he said.
He said Indonesia's net exports were only 10 percent of its total gross domestic product, so, the impact of the world financial crisis would not be significant.
However, the rupiah plunged due to the market's panic, he said.
