Indonesian rupiah: World’s most active currency
The Indonesian rupiah is the World’s most active currency at the moment with a 6% slide, followed by a 2.4% gain in the last 4 days.
A while ago the rupiah was 10,000 to the US$, now its 9,067. Obviously a sinking rupiah is good news for tourists coming to Bali. The Indonesian government has an idea of where it ant the rupiah to be. Too low and people start selling it, driving it lower, too high and Indonesia’s exports slow.
Here’s what the Jakarta Post says.
Rupiah rises as BI may buy it: World’s biggest mover
BEIJING (Bloomberg): Indonesia’s rupiah rose, the biggest fluctuation of any currency Wednesday, on speculation the central bank will buy it to reverse the biggest decline since 2001.
The rupiah had its biggest gain in almost nine months, paring a 4.8 percent slump against the dollar from May 15, the largest since April 20, 2001. Central bank Governor Burhanuddin Abdullah the same day said Bank Indonesia “has been in the market” andpledged to reduce currency volatility.
“What we mean by intervention here is buying rupiah and selling dollars,” he told reporters in Jakarta Wednesday. “We will continue to do so.”
The rupiah surged 2.4 percent to 9,067 against the dollar as of 10 a.m. Jakarta time, the biggest gain since Aug. 31, after the currency in the past four days slid 6 percent.
“The central bank may still want to sell dollars for rupiah,” to damp volatility in the local currency, said Rainir Rahsoelin, a currency trader at PT Bank Reson a Perdania in Jakarta. The authority may want to keep the rupiah at about 9,000, he said.
A weakening currency stokes inflation by making imports more expensive. The central bank will maintain a “tight-based” monetary policy this year to help Indonesia achieve its inflation forecast of 5 percent to 7 percent in 2007, Burhanuddin said onMay 15.
Consumer prices rose 15.4 percent in April from a year ago after climbing 15.7 percent in March, the statistics agency said on May 1.”The central bank is committed to monitor the market and will smoothen out fluctuations,” Abdullah said on May 15. “Our concern is the rupiah volatility.”
A gauge of the currency’s trading that suggests future direction, known as the relative strength index, was at 77.23 yesterday for the dollar against the rupiah.
A level above 70 indicates the dollar is poised to fall. The world’s biggest movers are based on changes in price or yield and are screened for the size of the market and amount of daily trading.