Indonesia To See More Capital Inflows In 2010, Finance Minister

Jakarta Globe, April 09, 2010

Indonesia is expected to see further capital inflows this year and the rupiah currency IDR is set to continue appreciating, Finance Minister Sri Mulyani Indrawati said on Friday.

Indonesian stocks, bonds and the rupiah have extended gains this year, driven by foreign interest and thanks to a combination of strong economic growth, low inflation, political stability, and prospects for further credit rating upgrades.

“We see the rupiah in a strengthening trend. Capital inflows are likely to continue this year,” Indrawati told reporters. She did not elaborate.

Indonesia’s stock index .JKSE is up about 13 percent this year, making it the best performer in Southeast Asia, while the rupiah is up more than 4 percent.

Indonesian bonds have also gained this year. The JPMorgan GBI-EM Index on Indonesia has returned 12 percent in the first quarter, outperforming the broader Asia index, which gained 7.4 percent. 1/8ID:nTOE62U05E 3/8 There have, however, been some concerns about the fast rise in asset prices and Indrawati’s comments follow remarks by Budi Mulya, a deputy central bank governor, on Thursday that Bank Indonesia (BI) had no plans for capital controls.

Mulya also said that “the stock market performance in many ways does reflect the performance of the real economy.

Reuters