The Indonesian rupiah’s recent relative stability proves Indonesia is on the right track, says booster-man Stephen Schwartz.

The head of the Indonesia branch of the International Monetary Fund (IMF), Stephen Schwartz, says that the continued stability of the rupiah, and even strength, is a reflection of the trust held in the Indonesian economy by investors.

It also shows the external position of Indonesia is improving, the balance of trade is in surplus, portfolios are strong, the IHSG rating is high, and bonds are being bought up by foreigners.

In the middle of 2006, he said, the slight weakness in the rupiah was caused by the withdrawal of funds, taken out and placed in foreign banks due to the hiking of interest rates overseas.

Meanwhile a representative from Standard Chartered, Fauzi Ichsan, predicts, boldly perhaps, that the rupiah will strengthen in the forthcoming months to a range of 8500 to 8800 rupiah per dollar. Currently it is at 9100. He attributes this possible fortitude in the currency to the trade surplus and not to any influx of funds into the country.

However into 2007 Fauzi says regional currencies will generally weaken, due to global factors, and the rupiah will inhabit the 8.700 9.000 range.

Tags: Indicators