Jakarta - Indonesian President Abdurrahman
Wahid strongly urged the central
bank yesterday to act promptly to boost
the flagging rupiah currency after it hit a
sevenmonth low.
Wahid said the weakness of the rupiah
was only temporary, even though it
had lost 9 percent in value against the US
dollar in the last few days and the country`s
growth figures for this year`s first
quarter were much lower than expected.
``I have asked the finance minister to
persuade state banks to help (boost the
rupiah),`` Wahid told a news conference.
``I have also asked Bank Indonesia to take
necessary action to stop the rupiah
weakening.``
Wahid`s statement was a clear sign
that Bank Indonesia, the central bank that
was granted independence from politics
last year, must be asked to intervene and
would decide on its own whether to do so.
His comments also countered a statement
last week by his senior economics
minister, Kwik Kian Gie, that the rupiah
should be left to market forces.
The slide of Indonesia`s currency and
the lower than expected growth figures
pose a serious threat to Wahid`s eightmonth
reformist government in its quest
to boost the debtridden, debilitated
economy and to implement further
democratic reforms.
Wahid`s comments yesterday had
little immediate effect on the currency.
Soon after he spoke, the currency was
trading at 8 615 to the US dollar, down
from 8 540 late on Monday.
On Friday, it had reached a sevenmonth
low of 8 768. For several months,
its normal trading range had been
between 7 000 and 7 500 to the dollar.
The rupiah`s value has been driven
down by a combination of expectations of
higher US interest rates and a confusing
barrage of comments by top Indonesian
policy makers.
For example, Wahid`s statement
yesterday was in contrast to that of
Miranda Gultom, the Bank Indonesia
deputy governor, who said on Monday it
would be pointless to intervene in a
panicked market because the rupiah was
influenced by ``nonmonetary factors``.
Wahid said the rupiah was weakening
because of both external and internal
factors, including what he termed the
inability of the bureaucracy to handle
economic reforms.
``This is a temporary problem that we
shouldn`t worry too much about. At the
same time, we cannot regard this as
unimportant,`` said Wahid.
He said the economy was sound and
he expected it to grow between 5 percent
and 5,5 percent this year, adding that it
had grown by 4,5 percent in the month of
April from a year ago.
However, on Monday the Central
Bureau of Statistics warned that the
weak rupiah, political instability and
legal uncertainties could push growth
this year down to 1,5 percent.
The gross domestic product grew by
3,21 percent this past quarter from a year
ago, the Central Bureau of Statistics said
on Monday - less than the expected 4 percent
to 5 percent growth.
Monday`s announcement of the new
economic growth figures fuelled speculation
that Indonesia`s economy might be
in for a sharp downturn.
Yesterday Wahid said he had ordered
the national police to recruit new officers
to crack down on growing attacks on
businesses. Many of the attacks involved
land disputes.