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NEWS UPDATES Asean Affairs                    21  September 2011

Business calls for stable currency

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As the Indonesian currency, 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 US$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.



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