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The lesson from Turkey is clear. Central bank’s independence is the anchor of market confidence. If Indonesia does not want to share the same fate as Turkey and lose its credibility, the government needs to immediately figure out, one way or another, how to reduce its budget deficit.
Inflation in the US, which might trigger an interest rate hike by the Fed and reduced liquidity injection, is becoming the biggest fear of emerging markets, including Indonesia. Investor’s money which has been anchored here might just return home, in great numbers and fast.
The letter of exemption from the trade ministry, owned by a number of steel importers, raised suspicions. Looking into several old government projects, the letter is suspected to have been used as cover-up allowing dozens of containers of steel to be imported without verification.