: Indonesia reaffirmed its commitment to allowing the free movement of capital and a floating exchange rate. Assistant Deputy Minister at the Economics Ministry, told Reuters on Wednesday the government was focused on getting exporters to bring home their offshore earnings. Indonesia adopted free capital flows and a floating exchange rate policy after the Asian financial crisis of the late 1990s. The comment comes a day after remarks from Indonesia's Vice President Jusuf Kalla suggested that Southeast Asia's largest economy may impose some control over capital flows. Indonesia's rupiah currency has come under severe pressure this year, hurt by a balance of payment deficit, weak prices for the country's commodities, and capital flows driven by expectations of the US Federal Reserve raising rates by year-end.The rupiah has lost 9% so far this year and is the second worst-performing currency in emerging Asia. In 2011, Indonesia's central bank issued a regulation requiring exporters to repatriate their earnings through local banks, hoping that some of the dollars would stay onshore and help protect the economy from possible capital outflows in the event global risk sentiment worsened. This year, Bank Indonesia again introduced rules to manage dollar liquidity onshore, including banning the use of dollars for domestic transactions and revising some auction mechanisms.
: Indonesia reaffirmed its commitment to allowing the free movement of capital and a floating exchange rate. Assistant Deputy Minister at the Economics Ministry, told Reuters on Wednesday the government was focused on getting exporters to bring home their offshore earnings. Indonesia adopted free capital flows and a floating exchange rate policy after the Asian financial crisis of the late 1990s. The comment comes a day after remarks from Indonesia's Vice President Jusuf Kalla suggested that Southeast Asia's largest economy may impose some control over capital flows. Indonesia's rupiah currency has come under severe pressure this year, hurt by a balance of payment deficit, weak prices for the country's commodities, and capital flows driven by expectations of the US Federal Reserve raising rates by year-end.The rupiah has lost 9% so far this year and is the second worst-performing currency in emerging Asia. In 2011, Indonesia's central bank issued a regulation requiring exporters to repatriate their earnings through local banks, hoping that some of the dollars would stay onshore and help protect the economy from possible capital outflows in the event global risk sentiment worsened. This year, Bank Indonesia again introduced rules to manage dollar liquidity onshore, including banning the use of dollars for domestic transactions and revising some auction mechanisms.
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