Rupiah expected to rebound this week<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Caution will likely be the watchword this week following last
\nweek's fall of the rupiah, but dealers are looking for the local
\nunit to rebound.<\/p>\n
The rupiah fell to a three-month low of Rp 8,730 per US dollar
\nin the middle of last week as investors took profit by selling
\nrupiah-denominated assets, but intervention by Bank Indonesia and
\nthe close monitoring of banks engaged in heavy selling of the
\nrupiah helped strengthen the unit to 8,520 by the close of
\ntrading last week.<\/p>\n
However, this was still lower than 8,320 per dollar the rupiah
\nclosed at the week before.<\/p>\n
\"Judging from Bank Indonesia's quick response, coupled with
\nexpectations of profit-taking, confidence in the market is
\nrunning high that the rupiah will claw its way back up,\" a dealer
\nat a European-based bank told The Jakarta Post over the weekend.<\/p>\n
Reports said that the central bank dispatched inspectors to a
\nnumber of banks involved in aggressive selling of the rupiah, to
\nensure their dollar buying activities were based on genuine
\nunderlying transactions, and were not for speculative purposes.<\/p>\n
Rising confidence in the U.S. economy triggered the dollar's
\nrise against currencies around the world last week, including the
\nrupiah, whose rapid appreciation had made it a star performer in
\nthe region.<\/p>\n
Foreign investors actively sold their rupiah assets, mostly
\nbonds, to be followed by domestic investors who sold rupiah to
\ncut losses, adding to the pressure on the local currency.<\/p>\n
In addition to external factors, domestic issues also
\ncontributed to the rupiah's fall. These included the declining
\ninterest margin between Indonesia and other countries, as well as
\nplans to start imposing taxes on previously tax-free mutual
\nfunds.<\/p>\n
Mutual funds have been exempt from income tax to help boost
\ninvestment in the country's capital market.<\/p>\n
Bank Indonesia stepped in during the last two days of the
\nweek, selling its huge dollar reserves to support the local unit.<\/p>\n
\"If the central bank continues to show similar signs (of
\nintervention), we're going to see a rebound. But still in a
\nnarrow range of about Rp 8,500 to 8,400 per dollar,\" the dealer
\nsaid.<\/p>\n
\"With Bank Indonesia around, speculative trading and panic
\nselling will be limited,\" he added.<\/p>\n
Meanwhile in the stock market, expectations that the rupiah
\nwill recover should help push the Jakarta stock index up, an
\nanalyst said.<\/p>\n
\"There is confidence that Bank Indonesia will maintain its
\nopen-eye policy on the rupiah. If this happens, then the index
\nwill bounce back as well,\" a stock analyst at Kim Eng Securities
\ntold the Post.<\/p>\n
The Jakarta Composite Index fell sharply last week, dragged
\ndown by the local unit's fall, but rebounded slightly on Friday
\nto close at 510.08, or 2.9 percent lower than the previous week's
\nclose.<\/p>\n
Daily value averaged Rp 477 billion compared to Rp 630.42
\nbillion the week before.<\/p>\n
\"If the rupiah can stay in a range of 8,400 to 8,500 per
\ndollar then the sentiment for the stock market will be positive,\"
\nthe analyst said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-expected-to-rebound-this-week-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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