[stop-imf] Bank Indonesia Says No Plan For Capital Controls; deal with IMF imminent

[Robert Weissman]

Dow Jones Newswires
July 27, 2000

Bank Indonesia Says No Plan For Capital Controls

SINGAPORE -- Indonesia's central bank doesn't have any plan to introduce
any capital controls or any other form of curbs on trading in the rupiah,
acting governor Anwar Nasution said Thursday.

"We're not going to introduce capital controls," Nasution said in an
interview with Dow Jones Newswires. "We are quite allergic to the currency
board system."

Instead, the central bank will strictly monitor banks' compliance with
existing rules and regulations, Nasution said.

Bank Indonesia has recently actively monitored activities of commercial
banks' dealing rooms in Jakarta to ensure that the rules are complied
with,

but this, Nasution said, wasn't a precursor to capital controls. "We are
more serious in implementing the existing rules and regulations," Nasution
said.

Visits by central bank officials to dealing rooms had made currency
traders

more cautious, helping to slow down the pace of the rupiah's slide.

Nasution also said the dollar should trade at 7,000 to 8,000 rupiah,
adding that the country's improved economic fundamentals don't warrant a
weakening rupiah. He said the dollar's current rate of around IDR9,000 was
"ridiculous."

"All indicators point that we have made a lot of improvement," Nasution
said. "There's no reason for the weakening of the rupiah."

Nasution said that even if Bank Indonesia intervenes in the market to
support the rupiah, the intervention will be "very limited."

Separately, Nasution confirmed that the government will sign a letter of
intent with the International Monetary Fund on Monday, which would pave
the way for a $400 million disbursement of the next tranche of the IMF's
loan package to Indonesia.

Nasution is in Singapore to attend a two-day regional central banking
conference, which will end Friday.

-By Netty Ismail, Dow Jones Newswires; 65-421-4807;
netty.ismail@dowjones.com