Welcome Guest   |  Login   |   Signup
JG Logo
Thu, May 24, 2012
Archive Search

Indonesian Businesses Want Rupiah at 9,000
Shirley Christie & Muhamad Al Azhari | September 20, 2011

A teller counts Rp 100,000 bank notes at Bank International Indonesia. The currency’s recent weakness against the dollar has caused the central bank to intervene.  (JG Photo/Safir Makki) A teller counts Rp 100,000 bank notes at Bank International Indonesia. The currency’s recent weakness against the dollar has caused the central bank to intervene.  (JG Photo/Safir Makki)
Share This Page
0
21
0
3
Share with google+ :


Post a comment
Please login to post comment

Comments

DrDez
7:28am Sep 21, 2011

Devine

There is thank goodness an awakening regarding strong currencies - but even now many people just look at the simple picture -


devine
7:10am Sep 21, 2011

Yes, SBD, but it increases the income from all our exports, not last oil, gas, gold, copper etc. and the subsidies should anyway be stopped altogether since it is nothing else than "burning" money. This money could be use in much better ways, i.e. subsidies for agriculture which would benefit ALL Indonesians and not only the richer...

Serigala-Berbulu-Domba
12:53am Sep 21, 2011

A US$1/Rp9,000 exchange rate will increase the fuel subsidy level from what it otherwise would have been, based on recent US$/Rp exchange rates, thereby putting more pressure on the Government to step up to the plate and take action to reduce the fuel price subsidy levels in next year's budget.

  • Previous
  • 1
  • Next

As the rupiah remains under pressure with selling by offshore investors, Indonesian businessmen and industry groups want a stable currency that will allow them to make better business decisions. A volatile rupiah, on the other hand, would increase the risk of conducting business.

“We don’t like to see the rupiah fluctuate too much. It would trouble us,” said Chris Kanter, the deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), in Jakarta. Chris is also the chairman and founder of Sigma Sembada Group, one of the country’s most prominent transportation and logistics contractors.

A strong rupiah would help companies lower the cost of importing goods but at the same time would hurt the competitiveness of goods sold overseas.

Ernovian Ismy, secretary general of the Indonesian Textile Association (API), shared Chris’s view, saying that the textile industry does need stability.

“We need to calculate our foreign-exchange revenue from exports, and we also need to buy raw materials from overseas using the dollar,’’ Ernovian said.

API favors the rupiah trading at around 9,000 against the dollar, a level that the group claims should be good both for exporters and importers.

API has forecast export revenue from textiles and textile product to rise 13 percent to $12.5 billion this year from 2010. In the seven months through July this year, textile exports reached $8.2 billion, up 24 percent from the same period a year earlier.

The government targets the country’s total exports rising to $200 billion this year from $160 billion in 2010, and a weaker rupiah would raise further the dollar value of those shipments.

Sigma’s Chris said that “9,100 to 9,200 per dollar is good for Indonesian business.”

Still, the rupiah, which was traded in thin volume in Jakarta on Tuesday, has barely moved from the start of the year when it traded at 8,990. The currency closed at 8,980 on Tuesday, up almost 2 percent against the dollar. To defend the rupiah Indonesian policy makers have proposed plans. Bank Indonesia, for instance, has said that the central bank would intervene in the market — by selling dollars to buy rupiah notes — as it has done this month.

Gundy Cahyadi, an economist at OCBC Bank in Singapore, said that “Bank Indonesia will keep the rupiah in tune with the rest of Asia, so the 9,000 level is really arbitrary,’’ Gundy said.

Juniman, an economist and cu rrency strategist at Bank Internasional Indonesia, said that foreign investors — who have recently been unloading their assets in Indonesia — would return here and to other emerging markets once concerns about the state of global financial markets subside.

Still, Indonesian companies that sell their products abroad want the rupiah to weaken further against the dollar, helping to boost their earnings once their overseas income is converted.

Fadhil Hasan, chairman of the Association of Palm Oil Producers (GAPKI) said that Indonesian companies that sell their products overseas should benefit from the weakening rupiah.

“Exporters will benefit from a falling rupiah,’’ Fadhil said, adding that the rupiah has been down in recent weeks to reflect concerns about Europe’s debt crisis. The rupiah is down 5.1 percent since Sept. 6, when it was at 8,548.

With additional reporting by Aloysius Unditu