More Headwinds for the Indonesian Econo…

Concern is rising over the state of Indonesia's economy, with inflation rising at a 5.6 percent clip in March after a 4.31 percent increase in February and the rupiah continuing to shed value, falling to Rp9,738:US$1. Economic troubles are arriving from a variety of different directions just as Finance Minister Agus Martowardjo was unexpectedly moved to the governorship of Bank Indonesia, the central bank. This increases the danger of creating a policy vacuum at a time when policy continuity is a major concern. No candidate has been announced to replace Agus, but whoever it is will be the third finance minister since President Susilo Bambang Yudhoyono was reelected in 2009. Analysts say the central bank has left its benchmark policy rate at 5.75 percent, a record low level, far too long, further threatening the value of the rupiah.

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