Ifan Kurniawan, the money market observer, said here on Tuesday the rupiah exchange rate could reach Rp9,200 per US dollar this week despite Bank Indonesia`s readiness to intervene.
In view of that he said the monetary authority must first seen the need to release its reserves.
Ifan who is also an analyst at PT First Asia Capital said the rupiah`s sharp fluctuations emerged after the European stimulus package was withheld until next October.
Market traders then immediately took an initiative to sell the rupiah again in a large amount making the currency to depreciate, he said.
He said if the conditions continued the chance for the rupiah to plunge deeper below Rp9,000 per dollar was bigger.
He said if the rupiah dropped to Rp9,200 the situation would be like in 2010 when the rate of the currency was between Rp9,200 and Rp9,400 against the greenback.
Ifan said the negative stance of market traders occurred because no positive signals had come from Europe and the US so far.
The rupiah depreciation would affect negatively on the composite index of the Indonesia Stock Exchange now reaching close to 3,700.
Market traders were actively releasing their shares although the price of shares was below the buying price because they felt safer to buy dollars.
He said the Indonesian government had to find ways to overcome the impact of the global economic slump.
He said Indonesia`s exports to Europe comprised only 14 percent while to the US 10 percent and so were relatively small but the global crisis would certainly affect the world`s economic growth.
"We are predicting the impact of the crisis in the two regions would make foreign traders tend to withdraw their funds from the market," he said.
On Monday they withdrew up to Rp94 billion and on Tuesday up to Rp129 billion, he said.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2011
