Bank Indonesia (BI) predicts that the drastic jump in the foreign debt value of a number of publicly listed companies will lead to the rupiah exchange rate weakening to Rp 16,000 per US dollar
ank Indonesia (BI) predicts that the drastic jump in the foreign debt value of a number of publicly listed companies will lead to the rupiah exchange rate weakening to Rp 16,000 per US dollar.
The prediction was revealed in a study commissioned by the central bank on companies' resilience against the weakening of the rupiah exchange rate.
'The result of a stress test of corporate resilience against the weakening exchange rate show that six out of 53 public corporations that have foreign debts'¦have the potential to be insolvent or have foreign liabilities that exceed their assets,' BI said in its latest Financial Stability Review published on Dec.10 as quoted by tempo.co.
On Wednesday, the BI median rate recorded that the rupiah stood at 12,900 per US dollar, plunging to its worst level in the last six years. Rupiah fluctuations also pushed down Indonesia's foreign currency reserves to US$111.14 billion in November, down from $111.97 billion in the previous month.
BI has warned of the potential of a jump in private foreign debt. BI governor Agus Martowardojo had conveyed his worries about the failure in foreign debt payments of private parties, the amounts of which exceeded the government's foreign debts.
'Private foreign debts should not cause a currency mismatch. This could happen if short-term debts were used to make long-term investments,' Agus said in April. (ebf)(++++)
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