[Kabar-indonesia] "Quite Happy" With IDR Rate: Bank Indonesia [+Rupiah Up at 9, 320]

[JoyoNews at aol.com]

[Note: According to Reuters, the rupiah rose almost 
half a percent to levels around 9,320/9,325 per dollar.]

Bank Indonesia Deputy Gov: "Quite Happy" With IDR Rate

By Sai Man

HONG KONG, June 21 (Dow Jones)--Bank Indonesia, Indonesia's 
central bank, said Thursday the Indonesian rupiah is stable and the
appreciation of the currency so far this year has been in line with
global foreign exchange movements.

"I believe the exchange rate is quite stable," said Deputy Governor
Aslim Tadjuddin in an interview with Dow Jones Newswires in Hong 
Kong. "I'm quite happy about the rupiah level."

Speaking on the sidelines of a World Bank conference, he said he
didn't think the current exchange rate would hurt the country's
exporters.

Tadjuddin's comments are the latest from Bank Indonesia aimed at
reassuring markets the bank is vigilantly monitoring movements in the
rupiah against the U.S. dollar.

Tadjuddin said exporters would be "happy" about the rupiah being
between IDR9,000 and IDR9,500 to the U.S. dollar, while importers
would be happy with it being between IDR8,500 and IDR9,000 to the
dollar.

"So if the currency is between IDR8,500 and IDR9,500, both importers
and exporters will be happy," he said.

At 0400 GMT Thursday, the U.S. dollar was around IDR9,350, down from
IDR9,365 late Wednesday.

Tadjuddin said the rupiah has appreciated about 5% since the start of
the year, lower than gains in other regional currencies, including the
Thai baht and South Korean won.

He said Bank Indonesia is confident inflation will drop to 7% this year.

That would be below the official 8% inflation rate target, but
Tadjuddin and other Bank Indonesia officials recently indicated it
might drop to around 7.0%.

Inflation so far is "going down, going down," he said.

"That's why I think we're going to reach the target of 7% at the end
of this year."

Indonesia's consumer prices rose 15.60% in May from the same month
last year, up from a 15.40% increase in April due to an
end-of-harvest-season surge in food prices. However, those rates were
lower than the rise of 18.38% in November, which followed the
government effectively more than doubling fuel prices Oct. 1.

Tadjuddin said milder inflationary pressures would allow Bank
Indonesia to proceed with monetary policy loosening, and achieving the
inflation target would leave "plenty of room" for further cuts in
interest rates.

Bank Indonesia began a long-anticipated easing in monetary policy in
early May with a quarter-percentage-point cut in its benchmark
one-month lending rate to 12.50%.

Analysts said they expect the rate to ease to around 11.00% by the end
of the year.

However, Bank Indonesia kept the benchmark lending rate unchanged at
12.50% earlier this month, which analysts said was aimed at helping to
insulate the rupiah from capital outflows.

Indonesia's currency has been hit by the risk aversion that has swept
emerging markets in recent weeks as foreign investors seek to hedge
against the impact of an expected U.S. Federal Reserve rate increase
later this month.

A sudden outflow of speculative capital caused the rupiah to slide
5.5% against the U.S. dollar in May and also caused a drop in the
Jakarta Stock Exchange composite Index.

Policy-makers have emphasized Indonesia's economic fundamentals remain
strong despite the recent risk aversion-related turbulence.

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Joyo Indonesia News Service
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