Capital Outflow Big: Chief Economic Minister

Jakarta (Antara Bali) - Chief economic minister Darmin Nasution admitted here on Thursday that capital outflow tended to be high in the third quarter and compounded by currency war it continued eroding the rupiah exchange rate.

The rupiah exchange rate dropped to Rp13,900 per US dollar in the trading on Thursday.

"Our situation is ,frankly speaking, that no fresh funds from outside are coming in. The funds even tend to leave. The pressure is compounded by market psychological condition," he said at his office.

Darmin admitted that the pressure on the financial market caused by capital outflow was quite high.

He said while now was mid year which was the time for sending companies' dividends abroad uncertainty over the Fed's plan to raise  interest rates  have also continued to affect negatively the inflow of capital to Indonesia.

"No dollar is coming in from outside and so the rupiah is continuing to depreciate," he said.

Apart from pressures from capital outflow Darmin who is a former governor of Bank Indonesia, the central bank, said that the stability of rupiah exchange rate had also been affected by the currency war potential after devaluation of Chinese yuan and Vietnamese dong.

Darmin said however that the rupiah depreciation would not last long. He said the government had taken anticipatory measures to stop increasing capital outflow.

One of the anticipatory measures, he said, is accelerating the implementation of infrastructure projects to draw capital inflow.

"That is why the door for investment must be open as wide as possible. Investment decisions are important and must be taken fast to open the door for dollars to come in," he said.

Darmin said strategic projects such as urban railway project or light rail transit project must be expedited.

President Joko Widodo is expected to submit the draft presidential regulation for the LRT project on Friday.

The rupiah stood at Rp13,800 per US dollar on Thursday it had touched the new psychological level of Rp13,947 during trading that day.

Based on data of inter-bank trading on Thursday evening the rupiah depreciated by 24 points to Rp13,866 from Rp13.842 per US dollar in the morning. (WDY)