ID :
32057
Tue, 11/25/2008 - 06:38
Auther :
Shortlink :
http://m.oananews.org//node/32057
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KADIN HOPES BI RATE TO BE LOWERED TO 8.5 PERCENT
Jakarta, Nov 24 (ANTARA) - The Indonesian Chamber of Commerce and Industry (Kadin) hopes the key rate can be lowered by 100 basis points to 8.5 percent to give the business sector an incentive to withstand the current global financial crisis.
"Kadin urges the lowering of the BI rate to eight or at most 8.5 percent to stimulate the business sector," the head of Kadin's permanent committee on fiscal and monetary affairs, Bambang Soesatyo, said here on Monday.
He predicted inflationary pressures in November would not be too high due to a decline in the price of non-subsidized fuels and the easing of aggregate demand pressure.
But he also hoped a lowering of the key rate would not cause the rupiah to weaken further as the factors behind the rupiah's current depreciation were just seasonal in nature.
"The depreciation of the rupiah is continuing because US dollar hunting is escalating as people need the greenback to pay debts, to prepare for the year-end holidays, for the hajj pilgrimage and for transfers to other countries," he said.
He said it was not necessary for the government to change the existing free-floating foreign exchange system as capital flows were now already under excellent control.
"To reduce pressure on the rupiah, the government needs to give a total blanket guarantee. With such a gurantee , those who keep foreign currencies at home will be willing to put them in the banking system again to increase foreign currency supply in the market," he said.
He said a blanket guarantee would also help keep big depositors' funds at home.
The BI rate currently stands at 9.50 percent.
"Kadin urges the lowering of the BI rate to eight or at most 8.5 percent to stimulate the business sector," the head of Kadin's permanent committee on fiscal and monetary affairs, Bambang Soesatyo, said here on Monday.
He predicted inflationary pressures in November would not be too high due to a decline in the price of non-subsidized fuels and the easing of aggregate demand pressure.
But he also hoped a lowering of the key rate would not cause the rupiah to weaken further as the factors behind the rupiah's current depreciation were just seasonal in nature.
"The depreciation of the rupiah is continuing because US dollar hunting is escalating as people need the greenback to pay debts, to prepare for the year-end holidays, for the hajj pilgrimage and for transfers to other countries," he said.
He said it was not necessary for the government to change the existing free-floating foreign exchange system as capital flows were now already under excellent control.
"To reduce pressure on the rupiah, the government needs to give a total blanket guarantee. With such a gurantee , those who keep foreign currencies at home will be willing to put them in the banking system again to increase foreign currency supply in the market," he said.
He said a blanket guarantee would also help keep big depositors' funds at home.
The BI rate currently stands at 9.50 percent.
