Philip Wee, a senior currency economist at DBS Group Holdings Ltd. in Singapore, comments on the outlook for the Indonesian rupiah in a telephone interview today. DBS predicts the currency will strengthen 1.5 percent to 8,400 per dollar by third quarter and 2.8 percent to 8,300 by year-end.
“Indonesia’s higher budget deficit of 2 percent of GDP for 2011 on higher oil prices was, unsurprisingly, taken in stride by the market. They have better growth prospects, lower debt and high foreign reserves which can support in the strengthening of the rupiah.
‘‘Indonesia’s ratings upgrades, versus downgrades in the weak EU peripheral nations, underscore the difference between emerging countries with strong international liquidity positions as opposed to fiscal deficit or public debt problems in the advanced economies.”