The combination of a strengthening Rupiah against the U.S. Dollar and lower crude oil prices on world markets are expected to result in a 3-5% drop in prices paid by Indonesian consumers for fuel starting in July 2002.
The Indonesian Government has recently ceased to subsidy domestic fuel prices, allowing fuel prices to follow developments in the global marketplace. As a result, May-June Indonesian fuel prices were predicated on a Rupiah trading at Rp.9,500 to the Greenback and benchmark crude oil prices of US$ 26.00 a barrel.
In the interim, however, the Rupiah has strengthened agaunst the dollar by almost Rp. 1,000, while Brent crude oil prices now stand under the $25.00 mark.
Any formal reduction in prices paid at the Indonesian pumps will be announced in the next week. Market observers predict that kerosene prices will drop 2 %, and diesel by 1%.
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