Stuck in a corner, Indonesia can find hope in the dollar

Article Abstract:

The International Monetary Fund (IMF) has opposed the creation of a currency board in Indonesia to boost the troubled rupiah despite the measure's effectiveness in other countries. IMF predictions about the economy place inflation at more than 100%, devaluation of the rupiah to 15,000 to the US dollar, and interest rates at 61%. Some analysts believe that the dollarization of the local currency and the creation of a currency board may provide the only hope for the economy to normalize. Making the dollar the official currency would eliminate central bank management of interest rates and allow market forces to determine exchange rates.

Public Finance Activities, Fiscal Policy, Management, Prices and rates, Indonesia, Rupiah (Indonesia)

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Tighten dollar link and Hong Kong can end speculation

Article Abstract:

The Hong Kong Monetary Authority must adopt a currency-board financial scheme if it wants the country to recover from the Asian financial crisis. Such a monetary system, which is based on the concept of achieving 100% foreign reserve to support the monetary base, would not only defend Hong Kong's currency from the volatility of stocks in the market, but would also protect the Hong Kong dollar from speculative pressures. Monetary officials may also strengthen the currency's relation with the US dollar by differentiating foreign reserves from other assets and putting emphasis on a fixed-rate exchange.

Foreign Exchange & Reserves Policy, Analysis, Evaluation, Stock-exchange, Stock exchanges, Monetary policy

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Develop a plan to bolster the Hong Kong dollar

Article Abstract:

The government and the Hong Kong Monetary Authority (HKMA) must enact measures and consolidate their efforts to reinforce the exchange-rate position of the Hong Kong dollar in face of the current Asian financial crisis. Despite the HK dollar's success in preserving its value vis-a-vis the US dollar for the last 15 years, market uncertainties are spurred by the unclear policies of the the HKMA with respect to maintaining the current rate of the HK dollar against the US dollar. For instance, investors are wary about the HKMA's methods in buoying up the local stock market.

Economic aspects

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