Jakarta Globe, October 3, 2013
Indonesia’s
central bank extended a 100 billion yuan ($15 billion) bilateral currency swap
arrangement with People’s Bank of China on Tuesday in an attempt to bolster
market confidence in Southeast Asia’s economy.
Bank
Indonesia goveror Agus Martowardojo hopes the swap would boost trade and direct
investment between Indonesia and China, as well as bolster short-term liquidity
to stabilize financial markets.
“The
agreement reflects regional commitment in the face of global uncertainty and
will contribute propitiously towards maintaining macroeconomic and domestic
financial stability,” Agus said in a statement released on Wednesday.
In 2009,
Indonesia and China agreed on a three-year 100-billion yuan currency swap to
help ease foreign-exchange shortages. Agus said the extension of the swap
agreement would build market confidence in Indonesia economic fundamentals.
Bank
Indonesia has raised its benchmark interest rate by a total of 1.5 percentage
points to 7.25 percent since June, in part to arrest rupiah decline and to keep
inflation in check.
Such
tighter monetary policy, however, comes with its own downside as it curbs
consumer spending in Indonesia, the Asian Development Bank said on Wednesday.
The ADB
also released its updated Asian Development Outlook 2013 report on Wednesday,
recasting growth estimates below 6 percent for 2013. The Indonesian economy is
now expected to grow 5.7 percent in 2013, less than the previous estimate of 6
percent. It is also projected to expand 6 percent in 2014, down from 6.6
percent growth previously, the report read.
First-half
growth at 5.9 percent came amid a drop in fixed investment, slowing consumption
and increased inflationary pressures following fuel subsidy cuts, ADB reported.
“Policies
taken to address inflation and the current account deficit will restrain growth
in the near term,” Edimon Ginting, ADB’s deputy country director for Indonesia,
said in a statement. “The economy will be [expanding] slower than anticipated.”
Indonesia,
once a darling of foreign investors, has been exposed to its external
vulnerabilities as its has to cope with deficit in current account while as hot
money exited the country in search of safe havens, due to the US Federal
Reserve’s expected tapering of quantitative easing measures. The rupiah fell to
its lowest rate against the dollar in four-and-a-half years.
The Central
Statistics Agency (BPS) reported a trade surplus for August, the first in five
months, despite a decline in exports by value. A 10 percent decrease in fuel
imports helped shrink the trade gap, but imports across the board — from heavy
machinery to automobiles — dropped in August. Inflation slowed to 8.4 percent
in September, from 8.8 percent a month earlier, BPS reported.
Inflationary
pressures will likely impact consumer spending through the end of 2013, ADB
reported. In 2014 spending is expected to rise again as inflation subsides and
political parties embark on an election-time spending spree, the bank said.
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| Renminbi coins and banknote. (Photo/CFP) |
Brics’ move to unseat US dollar as trade currency
"The U in Kundalini"- Oct 18, 2012 (Kryon channeled by Lee Carroll) - (Subjects: Kundalini, Unification, EU, Nobel Peace Prize 2012, Middle East, South America, Only 5 Currencies on Earth, Old Souls, Duality will dismiss, 3D Humanity will melt with Multi dimensional higher self, Global Unity… etc.)
"The U in Kundalini"- Oct 18, 2012 (Kryon channeled by Lee Carroll) - (Subjects: Kundalini, Unification, EU, Nobel Peace Prize 2012, Middle East, South America, Only 5 Currencies on Earth, Old Souls, Duality will dismiss, 3D Humanity will melt with Multi dimensional higher self, Global Unity… etc.)
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