Rupiah expected to remain strong<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The solid showing of the rupiah is expected to continue this week
\non expectations of further capital inflows to the country and
\nlingering negative sentiment against the U.S. dollar, a currency
\nanalyst said.<\/p>\n
\"The rupiah has a chance of strengthening, although it will
\nnot be as strong a gain as last week, but still, it could
\nprobably hit the 8,000 level,\" a foreign-exchange dealer at a
\nJakarta-based foreign bank told The Jakarta Post on Sunday.<\/p>\n
Last week's trading saw the local unit appreciate against the
\nU.S. dollar to close at Rp 8,275 per U.S. dollar -- the strongest
\nlevel since September 2000 -- partly due to the number of
\noffshore investors wishing to buy local assets here. The rupiah
\nclosed the previous week at 8,425.<\/p>\n
The local currency's progress was, to a great extent, due to
\nthe continued shaky performance of the dollar, which felt the
\npinch of a slew of discouraging economic data in the U.S., with
\nthe rise in the U.S. unemployment rate being the latest.<\/p>\n
The dealer saw no reason for the strengthening trend to stop
\nthis week.<\/p>\n
\"I see no indications that the dollar will rebound against
\nother currencies. It would be even tougher for the dollar to stop
\nthe rupiah, which has also been buoyed by capital inflows.\"<\/p>\n
Backed up by the country's increasingly stable macroeconomic
\nindicators -- followed by successive cuts in the central bank's
\ninterest rate and low inflation -- investors have been eying
\ndomestic assets.<\/p>\n
\"The sale of (Bank) Danamon has convinced investors that the
\ncountry is moving in the right (economic) reform direction. They
\nare now keen to see more assets for sale,\" he said, referring to
\nthe recent sale of Bank Danamon's 51 percent stake to a
\nconsortium led by Singapore's Temasek Holdings Ltd. and Deutsche
\nBank.<\/p>\n
Upcoming bond issues from the country's top firms provided
\nfurther impetus for investors, he added.<\/p>\n
Local companies have been rushing to issue bonds as a cheaper
\nway of raising cash amid a growing appetite among investors for
\nbonds as bank deposit rates have been declining. Foreign
\ninvestors are also attracted to the local corporate bonds because
\nof the better returns.<\/p>\n
PT Indofood, the world's number one instant noodle maker, and
\nBank Mandiri, the country's largest bank, are among those
\nplanning to issue bonds to raise cash.<\/p>\n
Meanwhile, a strengthening rupiah could also further benefit
\nthe Jakarta stock market this week, which would also be supported
\nby an estimated rebound in regional markets, a stock dealer said.<\/p>\n
\"The stronger rupiah is good as it will help strengthen the
\nfinancial condition of local companies with dollar-denominated
\ndebts. This will help encourage investors to take a 'buy'
\nposition,\" a dealer at a local securities firm said.<\/p>\n
If the rupiah's strong performance continued, she said that
\nthe Composite Index should be able to rise by 5 to 10 points.<\/p>\n
The index closed last week at 472.11, up from the previous
\nweek's closing of 467.94, with daily value averaging Rp 400.8
\nbillion (US$48.3 million) compared with Rp 428.79 billion the
\nweek before.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-expected-to-remain-strong-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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