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une 13, Online

Bank Indonesia (BI) Governor Agus Martowardojo said in Jakarta on Thursday that the increase in its benchmark interest rate (BI rate) to 6 percent was in response to the upward revision of expected inflation as well as to maintain both macro-economic and financial stability amid uncertainties in global financial markets.

'BI continues to stabilize the rupiah exchange rate based on fundamental conditions and to maintain liquidity in the domestic foreign exchange market,' said Agus after a BI board of governors meeting (RDG) on Thursday, as quoted by Antara news agency.

Your comments:

BI should not raise the benchmark interest rate.

Such actions only show that Indonesia depends on debt. By raising the interest rate, it piles up liability for the future. BI should let the currency drops so that more investors find Indonesia an affordable and attractive place to invest, so hopefully real economic activities takes place ' such as building factories for exports, more tourists visiting, etc.

Why this fear to show the true value of the rupiah? Such measures won't support the value of rupiah. The US accuses China of artificially making its currency low ' which causes the US to lose jobs, while Indonesia is artificially making its currency high at any cost ' this causes imports to be cheaper, so there's no need to work hard for Indonesians.

And since the news that BI is intervening to support the rupiah, people say it means the rupiah's actual value is lower and people start piling up US dollars.

Now I realize the meaning of BI's 'foreign exchange reserves', which really means 'unused money'.

H Cahyadi