Indonesia vows to head off impact of global capital on domestic economy

JAKARTA, Nov. 19 (Xinhua) -- The Indonesian government and the central bank would monitor the movement of the global capital into the country and to manage it in a condition that would not disturb the country's economy, Finance Minister Sri Mulyani here Thursday.

The statement came as strong capital inflows to the emerging markets, including Indonesia, following the start of the economic recovery in the economies along with the improvement of the global economy.

"We and the Bank of Indonesia (the central bank) will attempt to make the impact of the global condition, which has changed significantly and is very dynamic, does not shock and disturb management of our economy," she told reporters at the State Palace.

"The way is that we will continuously make the movements (of rupiah) in the basis of (economic) fundamental factors," Mulyani said.

But, the central bank would not conduct capital or reserve control and limited the foreign ownership at the certificate of the bank, deputy of the bank Darmin Nasution said.

"There is no capital or reserve control. (The bank) studies (the possibility of limiting foreign ownership at one-month bank certificate)," Nasution told reporters at the palace.

The bank currently issues one-month, three-month and six-month certificates to absorb excess funds in the market, but the certificates also attracted huge inflow of foreign capital.

Previously, Nasution has said that the rupiah may strengthen against U.S. dollars on the back of improving economic prospects and the bank's benchmark interest rate may be steady at 6.5 percent by up to year end and may rise at the beginning of next year as the inflation pressure will rise following the hike of global commodity demand and prices.