BI pays close attention to possible capital outflow

Jakarta (Antara News) - Bank Indonesia (BI) would continue paying close attention to market developments to anticipate capital outflow following the central bank rate`s further decline to 10.25 percent, an official said.

A capital outflow occurred in the second week of last September after the central bank lowered its rate to 10.75 percent, BI`s Strategic Planning Directorate head and spokesperson Budi Mulya said here Tuesday.

"The capital outflow was triggered by foreign investors` profit takings in shares, state bonds and Bank Indonesia promissory notes," he said.

The capital outflow weakened the rupiah`s exchange rate against the US dollar.

Budi made the statement after Bank Indonesia decided on Tuesday to lower its rate by 50 base points to 10.25 percent.

The Indonesian government`s decision to repay all the remaining debt to the International Monetary Fund (IMF) in the second week of last October resulted in a positive impact on Indonesia`s monetary condition although its foreign exchange reserve dropped by US$3.2 billion to $39 billion.

The repayment created a positive sentiment as the rupiah and composite index rebound, Budi said adding that the conducive trend was upward until today.

Budi said the BI rate may continue to decrease until late this year thanks to the stable macro-economy and constant economic revival.(*)
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