Jump to content
House Price Crash Forum
Sign in to follow this  
cgnao

Failing Currency

Recommended Posts

A stark warning of what is coming:

Indonesia acts to halt rupiah's plunge

Tuesday 30 August 2005, 9:10 GMT

Indonesia has increased its key interest rate after the rupiah's plunge to fresh lows, but analysts say the government must still reduce fuel subsidies to restore confidence in Southeast Asia's largest economy.

The central Bank Indonesia (BI) raised its reference rate by 75 basis points to 9.5% effective from Tuesday, after the rupiah dipped as low as 11,800 against the dollar – 21% lower than in early August - in trade on Tuesday.

The rupiah recovered slightly to trade at 10,800/10,950 - still down on Monday's close of 10,750/10,800 amid soaring global oil prices.

Indonesia is being battered on two fronts due to the high oil prices: it is scurrying to find dollars to pay for oil imports but must also pay out domestic fuel subsidies to a population extremely sensitive to their removal.

Despite being a member of the Organisation of Petroleum Exporting Countries, Indonesia's underfunded and ageing energy sector is unable to supply fuel needed to meet domestic demand, meaning it has become a net importer.

Share this post


Link to post
Share on other sites

I wonder if the rich countries won't barge their way through at least the early stages of oil depletion by using their superior buying power to effectively bankrupt developing nations? Indonesia is only one example, similar stories are in the Philippines, and other countries just catching into the global economy but lacking in domestic oil resources.

The richest countries are not just richest but more effective at turning oil into money, so they have a double advantage. What could happen is the mature nations cruise on pretty much just irritated by high oil prices whilst elsewhere millions seethe with anger if they are lucky or die of starvation if they are not.

One would have thought this would incite a good deal of animosity towards the mature nations, as if there is not enough already. Not a nice scenario developing.

Share this post


Link to post
Share on other sites
A stark warning of what is coming: USA - Katrina Hurricane

America acts to halt dollar's plunge

Tuesday 30 August 2005, 9:10 GMT 

America has increased its key interest rate after the dollar plunged to fresh lows, but analysts say the government must still reduce the trade defciit to restore confidence in the worlds largest economy.

The Federal Reserve raised its reference rate by 75 basis points to 4.25% effective from Tuesday, after the dollar dipped as low as 0.97 against the Euro – 21% lower than in early August - in trade on Tuesday.

The dollar recovered slightly to trade at 0.89/0.90 - still down on Monday's close of 0.87/0.88 amid soaring global oil prices.

The United States is being battered on two fronts due to the high oil prices: it is scurrying to find capital to pay for oil imports but must also pay out domestic fuel subsidies for the recent Katrina Hurricane disaster. The population is extremely sensitive to oil and its supply due the countries fascination with 5 Litre cars and Sports Utility Off Road vehicles.

Despite being a the leading economic power house, huge trade deficits and the recent hurricane in New Orleans,  America's bankrupt and corrupt war based energy sector is unable to supply fuel needed to meet domestic demand, meaning it has become a net importer.

Ahhh....... music to my ears :D

Share this post


Link to post
Share on other sites

Full blown currency crisis in Indonesia. Sooner rather than later this will start causing a domino effect.

Rupiah fall sparks new rate rise

BBC News,  Tuesday, 6 September 2005, 14:57 GMT

Indonesia's central bank has sharply raised its key interest rate for the second time in a week in an effort to halt a slide in the rupiah's value.

The increase of half a percentage point brings the rate to 10%.

The rupiah has lost more than 10% against the US dollar this year, because soaring world oil prices have put pressure on the Indonesian economy.

A fifth of the nation's budget goes on fuel subsidies and investors say plans to cut the cost do not go far enough.

Concerns about Indonesia's ability to finance the fuel aid have taken their toll on currency and stock markets.

The rupiah strengthened slightly after the interest rate move and was trading at 10,300 against the US dollar, compared with 10,360 previously.

Jakarta's main stock index closed 1.5% higher on Tuesday. Analysts said the latest rate rise had been largely expected.

Measures 'vague'

The rupiah began its tumble in August, as Indonesia was forced to sell the currency to buy dollars and pay for crude oil imports.

A week ago, it hit a four-year low of 11,750 against the dollar, prompting the central bank to raise interest rates by three-quarters of a point.

President Susilo Bambang Yudhoyono said last week that fuel aid would be reduced after October.

However, analysts said the measures were vague and voiced concerns about a compensation package for the poor, which they said was state aid under a different name.

Even so, the plan was expected to push inflation up to 9% this year, central bank governor Burhanuddin Abdullah said on Tuesday.

Subsidies are a politically sensitive subject in Indonesia.

Fuel protests contributed to the downfall of former President Suharto in 1998.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.