Friday, October 9, 2009


Jakarta, Oct. 9, 2009 (ANTARA) - Signs of global economic recovery such as the fall of the US dollar in regional markets has helped the rupiah to strengthen over the past few days to its highest level this year.

The US dollar fell to its lowest level against the currencies of six major trading partners in almost 14 months as signs of global economic recovery which spurred demand for riskier assets.

The dollar depreciated 0.7% to $US1.4801 per euro, from $US1.4691 on Wednesday. In regional Asian trade, the U.S. dollar fell to 1,167.15 South Korean won from 1,170.50 a day earlier, to 1.3932 Singapore dollars from 1.4016, to NT$32.14 from NT$32.17, to 46.50 Philippine pesos from 46.64, and to 33.31 Thai baht from 33.36.

On Thursday (Oct. 8) morning, the rupiah even touched the level of Rp9,365-Rp9,375 per US dollar.

Although on Friday (Oct. 9, 2009) morning, the Indonesian currency slightly weakened to Rp9,435-Rp9,445 per US dollar, compared to its exchange rate at Rp9,850/10,050 per dollar on October 10, 2008.

The slight depreciation of the rupiah at this weekend was due to a US dollar rebound in Asian markets following a statement of Federal Reserve Chief Ben Bernanke saying that interest rates needed to be increased after the US economy had improved.

The rupiah`s fall, however, was considered quite positive because a rapid increase in the Rupiah`s exchange rate could negatively affect local products in export markets, Kustaman Thayib, another money market observer, said recently.

The rupiah was expected to reach the level of Rp9,300 per US dollar this week thanks to the ongoing positive sentiments from internal and external factors, Rully Nova, a foreign exchange analyst of PT Bank Himpunan Saudara Tbk, said recently.

Indonesia was still a better potential market that many other Asian countries, he said. The country`s economic growth was expected to pick up in 2010 following the recovery of the global economy, he added.

The Asian region especially was considered as facing better economic growth prospects than the United State or Europe, he said.

More investors might come to Indonesia in the future as the country`s huge population of over 200 million was a potential market, he explained.

"We are optimistic that the country`s growing economy will continue to boost the rupiah," Nova said.

Farial Anwar, a domestic money market observer, said the Indonesian currency`s appreciation was also thanks to Wall Street gains as strong profits from Alcoa launched the third quarter reporting season.

Alcoa rose 3.5% after it reported a $US77 million profit in the third period, ending a string of losses.

Meanwhile, BI Senior Deputy Governor Darmin Nasution said Bank Indonesia (BI) has not set itself a target in maintaining the rupiah`s exchange rate.

"Our preference is that the local currency`s volatility should not be too high in order to enable businessmen to predict future conditions," Nasution said in response to a press question here on Friday (Oct. 9).

An unstable exchange rate of the rupiah could make it difficult for businessmen to determine the amount of foreign currencies they need, he said.

"A volatile exchange rate will make it difficult for the businesses. We know the fundamentals of the rupiah`s exchange rate, but there is no target," he said.

The exchange rate of the Indonesian currency should also follow developments in regard to neighboring countries` currencies, he said.

"We should also pay attention to the currencies of neighboring countries, because we cannot play alone," he said.

Based on BI data, the middle rate of the local unit against the US dollar tended to strengthen within this week.

Some experts believed that the rupiah might reach the level of Rp9,000 per US dollar at the end of the year.

According to the Central Bureau of Statistics (BPS), Indonesia recorded a surplus of US$1.25 billion in its foreign trade in August 2009.

"The figure is the difference between exports totaling US$10.55 billion and imports reaching US$9.3 billion in August 2009," BPS Chief Rusman Heriawan said on Thursday.

Indonesia enjoyed a surplus of US$635 million in August 2008 when its exports stood at US$12.50 billion and imports reached US$11.86 billion.

In the January-August 2009 period, the country saw a surplus of US$10.94 billion in its foreign trade compared to US$5.62 billion a year earlier.

Indonesia`s exports in the first eight months of 2009 were fueled by mining products, while industrial and farm product exports continued to fall, he said.

Data from the BPS show industrial and farm exports in August 2009 dropped 24.9 percent and 9.7 percent respectively from a month earlier while mining product exports rose 21.42 percent.

Indonesia hopes to enjoy an economic growth at 4 to 4.5 percent later this year.

In 2010, the country`s economic growth was expected to reach 5.0-5.5 percent in line with an acceleration in export growth following global economic recovery, strong private consumption and increased investment, Deputy Governor of Bank Indonesia (BI) Budi Mulya said recently.



(T.F001/A/F001/A/F001) 09-10-2009 16:48:04

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