ID :
31054
Wed, 11/19/2008 - 10:01
Auther :
Shortlink :
http://m.oananews.org//node/31054
The shortlink copeid
BLANKET GUARANTEE NEEDED TO STOP RUPIAH DEPRECIATION: OBSERVER
Jakarta, Nov 19 (ANTARA) - The government needs to issue a blanket guarantee in order to stop the trend in the rupiah depreciation against the US dollar currency, chief economist of state-owned bank BNI Tony Prasentiantono said.
"The rupiah has reached Rp12,000 per US dollar and will continue to depreciate if the government does not issue a blanket guarantee," Prasentiantono said here on Tuesday.
The BNI chief economist expressed concern that if the government did not issue a full guarantee on banks' deposits the rupiah would face difficulties to return to the normal level, even it could experience a free fall such as what it had experienced during the 1998 financial crisis.
He said that the financial crisis had spread everywhere so that a blanket guarantee could only withstand the pace of rupiah depreciation.
"Even though the government issues a blanket guarantee it is unlikely that the rupiah would return to the Rp10,000 level against the greenback," he said.
In order to return the rupiah to the Rp10,000 level, a blanket guarantee alone would not enough. It needed an external factor as well, namely the US central bank or The Fed, should cut its benchmark rate by at least 50 basis points, or from 1.0 percent at present to 0.5 percent, he said.
"It will depend on the two factors, though I also predict that early next year the rupiah will return to the Rp10,000 but not lower than that," he said.
"The rupiah has reached Rp12,000 per US dollar and will continue to depreciate if the government does not issue a blanket guarantee," Prasentiantono said here on Tuesday.
The BNI chief economist expressed concern that if the government did not issue a full guarantee on banks' deposits the rupiah would face difficulties to return to the normal level, even it could experience a free fall such as what it had experienced during the 1998 financial crisis.
He said that the financial crisis had spread everywhere so that a blanket guarantee could only withstand the pace of rupiah depreciation.
"Even though the government issues a blanket guarantee it is unlikely that the rupiah would return to the Rp10,000 level against the greenback," he said.
In order to return the rupiah to the Rp10,000 level, a blanket guarantee alone would not enough. It needed an external factor as well, namely the US central bank or The Fed, should cut its benchmark rate by at least 50 basis points, or from 1.0 percent at present to 0.5 percent, he said.
"It will depend on the two factors, though I also predict that early next year the rupiah will return to the Rp10,000 but not lower than that," he said.
