So far, so good

Article Abstract:

Analysts praise Indonesia for its foreign exchange policy. Bank Indonesia gradually widened the rupiah's trading band to 12% in the 18 months to Jul 1997, and this has prevented it from coming under speculative attack. This defence held up even through the crisis period connected with the threatened devaluation of the Thai baht, which coincided with a volatile election in Indonesia. Bank Indonesia widened the trading band still further to 12% in Jul 1997, when Asian currencies suffered in the wake of the baht devaluation. The rupiah fell 2% then, but later rebounded.

Administration of General Economic Programs, Currency Stabilization Programs, Cover Story, Currency stabilization

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Mixed bag

Article Abstract:

The World Bank country manager for Indonesia Dennis de Tray reports that the country's economy is one of the fastest growing in the world, but the growth is creating monetary policy problems for Indonesia. The economy grew 8.1% in 1995 with large gains in foreign investment and exports. The two concerns are the current-accounts deficit and inflation. The government is increasing bank reserve rates to slow loan growth and encourage consolidation, but it may not have enough other monetary tools available to control growth.

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Keeping the lid on

Article Abstract:

Indonesia is seeking to control the growth of the money supply using tight monetary policies. The central bank has increased its reserve requirement from 3% to 5% in Sep 1996 and a cap on loan growth has been set of 17%. Economists are concerned about Indonesia's narrowing trade surplus, which fell to $193 million in Jun 1996 compared with $382 million in Mar 1996. However, export growth was 11% for 1st half 1996. Inflation also appears to be increasing in fall 1996.

Economic aspects

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