Rupiah Rises Against US Dollar As Indonesia Lifts 2010 Growth Target

Friday, 4 September 2009

The Jakarta Globe

The rupiah rose on Thursday, snapping a three-day losing streak, after the government raised its 2010 economic growth target and Bank Indonesia said strength in the currency will help ease inflation.

Gross domestic product will increase 5.5 percent next year from a previous estimate of 5 percent, Finance Minister Sri Mulyani Indrawati said. The Jakarta Composite Index of shares rebounded following three days of declines.

“The rupiah’s gains were probably due to the government’s higher growth forecast next year, suggesting that Indonesia will continue to lead the region in macroeconomic improvements,” said Enrico Tanuwidjaja, an economist at OCBC Bank in Singapore. “Stocks also turned positive in line with the region and this is helping the rupiah.”

The rupiah appreciated 0.7 percent to 10,110 against the dollar as of 7:45 p.m. in Jakarta on Thursday from 10,185 on Wednesday, when it fell to 10,195, the lowest level since July 17. Indonesia’s benchmark stock index climbed 1.6 percent after losing almost 4 percent in the previous three days.

Central banks across Asia have started to signal they may soon need to raise borrowing costs as stimulus packages revive economies and boost spending.

“The momentum of domestic economic growth is gaining ground,” according to Thursday’s central bank statement.

The government set a target for the rupiah of 10,000 on Thursday in its 2010 state budget draft. Inflation was forecast at 5 percent. Consumer prices rose 2.75 percent in August from a year earlier, accelerating for the first time in 11 months, a statistics department report showed on Sept. 1.