Bullish stock market to help drive rupiah this week<\/p>\n
Dadan Wijaksana
\nThe Jakarta Post
\nJakarta<\/p>\n
An absence of fresh news is expected to limit the movement of
\nthe rupiah this week, although bullish sentiment in the stock
\nmarket will provide more leeway to the local currency to slightly
\nstrengthen against the dollar, an analyst has said.<\/p>\n
The rupiah closed higher last week at Rp 8,740 against the
\nU.S. dollar, compared to the previous week's closing of Rp 8,870.<\/p>\n
For this week, a currency analyst with an international bank
\npredicted the rupiah would test the Rp 8,700 level on continued
\nhealthy sentiment in the stock market, the composite index of
\nwhich experienced a 6 percent increase last week.<\/p>\n
"In line with the movement in the stock market, the rupiah
\nwill be stable with a strong upward tendency this week," he told
\nThe Jakarta Post over the weekend.<\/p>\n
Relatively stable macroeconomics indicators will also spur
\npositive sentiment in the market, but dollar demands from
\ncorporations will likely offset the rupiah's movement, he added.<\/p>\n
Many of the country's debt-ridden companies, which are saddled
\nwith foreign debts totaling US$60 billion, will need dollars to
\nrepay their maturing debts as well as finance imports, which will
\neventually cast a shadow on the rupiah's performance.<\/p>\n
The companies borrowed the money before the 1997-1998 Asian
\nfinancial crisis, which crippled the country's economic
\nactivities, in turn prompting the companies to seek debt
\nrescheduling.<\/p>\n
However, as most of the companies only managed to secure a
\nthree-year rollover, they had to start making payments for
\nmaturing debts last year.<\/p>\n
Nevertheless, that will only slightly impede the upward trend
\nof the rupiah as the market is focusing on progress in bank
\ndivestment programs and privatization.<\/p>\n
"If there is progress, it would be good for the rupiah," the
\nanalyst said.<\/p>\n
The government is currently preparing to relaunch the canceled
\nsale of a 71 percent stake in Bank Niaga, with 20 percent first
\nbeing sold directly on the stock market, followed by the
\nremaining 51 percent stake being offered to strategic investors.<\/p>\n
The government also plans to sell a majority stake in Bank
\nDanamon next month and in Bank Lippo by the end of the year
\ntogether with the sale of a 30 percent stake in Bank Mandiri.<\/p>\n
In the stock market, positive sentiment will keep the market
\nplayers active, following the 6 percent jump in the composite
\nindex last week, according to a dealer with a local brokerage.<\/p>\n
He was quick to add, however, that profit-taking would start
\nto set in, impeding the index's further movement.<\/p>\n
"I think the market will remain active this week, with players
\nturning to second-liners. However, profit-taking should dominate
\ntrading in the first days of trading," he told the Post.<\/p>\n
The Jakarta Stock Exchange composite index rose 30.976 points
\nover the week to 545, from 514.02 points, mostly triggered by
\nexpectation of the upgrading of the country's sovereign rating
\nfollowing an agreement to reschedule some $1.3 billion in debts
\nto private creditors grouped under the London Club.<\/p>\n
Daily volume last week averaged 987 billion shares valued at
\nRp 703 billion ($80.6 million) compared to the previous week's
\n481.34 million shares valued at Rp 386.44 billion rupiah.<\/p>\n
State telecommunications firm PT Telkom rose Rp 325 over the
\nweek to Rp 4,275 and Indosat closed Rp 100 higher over the week
\nat Rp 11,450.<\/p>\n
Cigarette producer Sampoerna gained Rp 125 over the week to Rp
\n4,475 while rival Gudang Garam surged Rp 850 over the week to
\nclose at Rp 11,550.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bullish-stock-market-to-help-drive-rupiah-this-week-1447893297",
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"sponsor": "Okusi Associates",
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