Bank Indonesia (BI) to assess China’s strengthening currency (yuan) will have a positive impact to the Indonesian economy, particularly in the trade sector.
“With a faster yuan appreciation than the amount it will certainly make China’s goods more expensive, while the prices of our goods to China cheaper,” said Director of Economic Research and Monetary Policy (MGD) Perry Warjiyo Bank Indonesia, in Jakarta, Monday (21 / 6 / 2010).
Nonetheless, Indonesia’s exports to the country “Bamboo Curtain” was more the form of commodity-based natural resources so that its growth will depend on market demand.
“Exports of commodities is relatively insensitive to exchange rate movements, but rather on the strength of demand there. With China’s growing economic strength, our exports will continue to grow,” he said.
Perry explains the financial side, the impact of the strengthening yuan against the map does not have significant capital flows in emerging market countries, including Indonesia. “Appreciation of yuan will not be drastic, but still within the range of flexibility in order. Flows of capital into Asia’s currency will gain was not a big difference to Indonesia with a stable rupiah,” he explained.
He predicts, with China’s economic policy changes that began to shift from relying on export growth to domestic consumption, the tendency of strengthening yuan will happen.
As is known, the United States and several other countries want a yuan revaluation. Minister of Finance of the United States Timothy Geithner said last week that China revalue its currency refusal had prevented a global economic reform.
China adopted a floating exchange rate regime is limited from mid 2005 and were frozen in July 2008 on the position of 6.83 yuan per U.S. dollar.
International pressure on China has strengthened with the plan dealt with the controversial currency policy of China which will be discussed at a summit of Group of 20 member countries (G-20) in Toronto on June 26 to 27.
