[Kabar-indonesia] BI sees higher FX reserves

[Joyo at aol.com]

Indonesia central bank sees higher FX reserves

JAKARTA, November 2 (Reuters) - Indonesia's foreign exchange
reserves are expected to climb to around $47 billion at the
end of 2007, up from $42.35 billion at the end of September,
a central bank deputy governor said on Thursday.

The estimate is above a finance ministry forecast in August
that saw reserves reaching $39.50 billion at the end of this
year and $43.58 billion at the end of 2007.

"Foreign exchange reserves are expected to reach around $47
billion at the end of 2007," Hartadi Sarwono told an
infrastructure conference, adding that reserves would be
sufficient to cover around 5 months of imports and foreign
debt repayments. He did not elaborate on the factors
boosting reserves, but analysts have said any increase was
likely to be linked to strong exports of commodities and
minerals from the resource-rich country.

Sarwono also said that if an annual inflation target of 6.5
percent in the state budget was met next year, the central
bank may be able to cut the benchmark BI rate to 8.5 percent
next year from 10.75 percent currently.

Annual inflation eased to 6.29 percent in October from 14.55
percent in September, giving the central bank more room to
cut rates now that the impact of last year's surge in fuel
prices has faded.

The state budget forecasts interest rates on 3-month central
bank debt paper (SBIs) will average 8.5 percent next year.
The 3-month rate refers to the one-month BI rate.

"If inflation falls to 6.5 percent as mentioned in the state
budget, then there is a possibility that BI rate could fall
to 8.5 percent," Sarwono said.

He also repeated the central bank's forecast for annual
inflation of around 6 percent next year, against around 7
percent forecast for this year.

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Joyo Indonesia News Service
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