Analysts say yuan change won't help rupiah much<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
China's revaluation of the yuan is a mere flash in the pan for
\nthe rupiah, analysts are saying, with the local currency unlikely
\nto gain any further footing against the U.S. dollar.<\/p>\n
The rupiah had already passed its \"fleeting moment of positive
\nsentiment\" from the yuan revaluation and was expected to fall
\nback to its \"chronic problem\" of the enormous domestic demand for
\nthe greenback overwhelming its short supply, analysts said.<\/p>\n
Analyst Farial Anwar of the Currency Management Group said the
\nrupiah's recent gain against the dollar following the yuan's
\nrevaluation was a short-term phenomenon that only lasted for the
\nearly hours of trading.<\/p>\n
\"It was just for that moment, and it was mostly from
\nspeculators picking up news of the yuan revaluation,\" he said.
\n\"After that, trading went back to normal according to the
\nmarket's supply and demand of the dollar.\"<\/p>\n
China scrapped on Thursday its decade-old yuan-dollar peg,
\neffectively revaluing the currency's exchange rate up 2 percent
\nto 8.11 yuan a dollar by pegging it to a basket of major
\ncurrencies.<\/p>\n
The long-anticipated yet still surprising announcement
\nimmediately lifted other currencies in the region, particularly
\nthe Japanese yen, the Korean won and the Taiwanese dollar.<\/p>\n
The rupiah trailed along behind the trend, reaching an
\nintraday high of Rp 9,710 a dollar, but slipping back to Rp 9,795
\nin the day's closing -- though still up from Rp 9,800 on Thursday
\n-- as huge corporate demand again lapped up the dollar.<\/p>\n
Farial expected the rupiah to be trading against the greenback
\nat between Rp 9,750 and Rp 9,850 this week.<\/p>\n
\"Strengthening the rupiah has more to do with efforts in
\nfixing the market's supply and demand imbalance, by requiring
\nexport revenue repatriation and prohibiting dollar loans without
\nunderlying transactions, rather than from the yuan,\" he said.<\/p>\n
Analyst Khalil Rowter said the effects of the yuan revaluation
\non the rupiah were likely be short-term because Indonesia was not
\na major trading partner of China.<\/p>\n
\"This is unlike Japan, Korea or Taiwan, whose economies -- and
\nthus their currencies -- are more directly tied to China's,\" he
\nsaid.<\/p>\n
Khalil said that the rupiah was likely to stay in its current
\nrange, because Indonesia's free-floating forex policy meant its
\ncurrent trading range of between Rp 9,600 and Rp 9,800 to the
\ndollar reflected its fair market value.<\/p>\n
However, he said other long-term effects were likely to come
\nfrom the yuan revaluation, such as a slowing down of China's
\neconomy, which would affect global oil prices, other economies
\nand currency bourses, including Indonesia's.<\/p>\n
Standard Chartered economist Fauzi Ichsan said the impact of
\nthe yuan's strengthening was little -- if not \"neutral\" -- on the
\nrupiah.<\/p>\n
\"The rupiah will only be affected by resulting temporary
\nsentiments,\" he said.<\/p>\n
Fauzi, who expects the rupiah to trade in the range of Rp
\n9,835 to Rp 9,875 a dollar this week, said the yuan revaluation
\nwas unlikely to create a greater competitive edge for Indonesian
\nexports, as the rupiah's already-low exchange rate should have
\ncontributed more to boost exports.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/analysts-say-yuan-change-wont-help-rupiah-much-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}