Senin 25 Nov 2013 20:13 WIB

Outflow of foreign funds still low

Aviliani
Foto: Republika/Tahta Aidilla
Aviliani

REPUBLIKA.CO.ID, JAKARTA -- Foreign fund outflows from Indonesia remain low, despite the rupiah depreciating against the US dollar, economist Aviliani has said.

"The rupiah's exchange rate against the US dollar will be in the range of 10,500-12,000. It is likely to remain within these levels irrespective of whether the United States engages in tapering in 2014," Aviliani, a macro-economic expert and secretary of the National Economic Committee (KEN), noted here on Monday.

She added that even if the United States began tapering, foreign funds will remain invested in developing countries, including Indonesia.

"If tapering is announced, the possibility of foreign funds remaining in emerging economies (developing countries) is still high," Aviliani said.

She pointed out that there is a difference in growth between advanced and developing countries: advanced countries are experiencing sluggish growth, while developing economies are growing rapidly.

Earlier, World Bank President Jim Yong Kim had noted that several countries in Southeast Asia could be affected if the US Federal Reserve implemented its tapering plan.

In a press statement on Friday, Jim Yong Kim said that countries most likely to be affected by a tapering of the United States' quantitative easing policy include Thailand, Malaysia and Indonesia.

He said that besides being affected by the tapering, an outflow of foreign funds from these countries could also be triggered by domestic weaknesses, such as relatively high current accounts or fiscal deficits.

The World Bank director said that interest rates have been increasing in the countries mentioned above in response to an expected tapering announcement.

Kim believes that even if tapering does take place, interest rates are likely to increase and create problems in these countries.

The Federal Reserve, on October 30, decided to maintain its financial stimulus program as expected, while noting that US fiscal policy is hampering economic growth.

 

 

 

 

 

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