Indonesian intervention jeopardised in rupiah plunge

[csl123]

The depletion of foreign currency is due to the amount of fuel subsidies being given out. Indonesia is growing and therefore the amount of energy being consume increases over the years. This had resulted in government using a bigger amount of their govt revenue for fuel subsidies.

There is no basis of capital flight from Indonesia, on the contrary, investment is moving into Indonesia, due to growth and more recently, an increase in interest rates.

[CityFarmer]

The Indonesia Rupiah is vulnerable to FX trader/speculator due to its current account deficit policy. Base on info, current account deficit started from 2012, and till most recent 1Q2013, with deficit of -US$5.7 billion. One of the contributing factor is the increasing subsidized fuel consumption...

http://www.tradingeconomics.com/indonesi...nt-account

Indonesia is trying to narrow the gap... Let's hope FX trader/speculator wouldn't trigger next financial crisis in this region with Rupiah ...

[csl123]

I don't see how Indonesia could close the gap. This would unlikely to happen at least not before the 2014 Presidential election. It would be unpopular to reduce fuel subsidies prior to election. The gap would continue to widen unless fuel prices reduce or domestic demands drops (which is unlikely).

[Greenrookie]

I don't see how Indonesia could close the gap. This would unlikely to happen at least not before the 2014 Presidential election. It would be unpopular to reduce fuel subsidies prior to election. The gap would continue to widen unless fuel prices reduce or domestic demands drops (which is unlikely).

We shall know by 17 June if Indonesia will do anything about the fuel subsidy

http://www.ft.com/intl/cms/s/0/3b52eb5a-...z2WIOe9YN3

[chialc]

Yes, I remember encountering a mock/protest in JKT last year due to the fuel subsidy.