TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Your letters: Foreign currency controls
I refer to âBank Indonesiaâs no-dollar rule may create distortion: Govt,â (The Jakarta Post, June 29, p13)
Change Size
I
refer to 'Bank Indonesia's no-dollar rule may create distortion: Govt,' (The Jakarta Post, June 29, p13).
Foreign currency controls and forced tender by Bank Indonesia is nothing but a very desperate attempt to shore up a struggling rupiah.
Countries such as Ghana, Zimbabwe, Venezuela, South Africa, Argentina, Brazil, Zambia, etc. use currency controls to prop up their ailing currencies, to prevent an economic crash. These policies end up hurting businesses and lead to shortages of food, medicine and just about anything else.
When convertibility is allowed for profit remittances but with less than full convertibility, this damages businesses and investor confidence. This explains why foreign investors are less willing to invest new money in a country with such controls, even with 'guarantees' on profit remittances.
Investors become justifiably nervous when it seems a government is considering imposition of exchange controls. At that point, settled money becomes 'hot' and capital flight occurs.
S Dollar
Jakarta
