Rupiah may still rise on IBRA dollar-selling: Analyst<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
Dollar-selling by the Indonesian Bank Restructuring Agency
\n(IBRA), amid slowing corporate demand for the foreign unit, may
\nwedge the rupiah from its recent trading band this week to test
\nthe 10,000 level again, said one currency analyst.<\/p>\n
Director at PT Bank Buana Indonesia Pardi Kendy said demand
\nfor the U.S. dollar remained high, but was likely to ease in the
\ncoming days as firms deferred their dollar purchases to next
\nyear.<\/p>\n
At the same, IBRA's converting its dollar proceeds would give
\nthe local unit the needed boost to ascend, he said.<\/p>\n
\"There has not been much dollar-buying likely, with that many
\nholidays until the year-end,\" Pardi told The Jakarta Post on
\nMonday.<\/p>\n
IBRA, which should have secured some Rp 3 trillion (about
\nUS$287 million) in asset sales last week, must convert its dollar
\nproceeds into rupiah before transferring them to the state
\ncoffers.<\/p>\n
The agency is earmarked to raise a total of Rp 27 trillion in
\nasset sales this year to help plug a deficit in the state budget.<\/p>\n
Last week, dollar selling by IBRA helped the rupiah strengthen
\nto 10,020, but companies moved in to scoop the cheap dollar. At
\nFriday's close the local unit still ended lower at 10,425,
\nagainst 10,385 a week before.<\/p>\n
Pardi added that Bank Indonesia would likely seize the
\nmomentum to release dollar supplies onto the market.<\/p>\n
But he ruled out the possibility of heavy interventions. Pardi
\nsaid Bank Indonesia would unlikely spend much for a stronger
\nrupiah.<\/p>\n
In previous years, he said, Bank Indonesia was often seen
\nwindow-dressing the rupiah, pulling up the local unit to make it
\nlook good at the turnaround of the new year.<\/p>\n
\"The government hasn't done any window-dressing over the past
\ntwo years, I don't think they'll do it this year,\" he said.<\/p>\n
The market has begun to cool down over the past few days, as
\nwas evident in the narrow band that has marked the rupiah's
\ntrading pattern.<\/p>\n
Last week's signing of the fourth letter of intent (LoI) to
\nthe International Monetary Fund (IMF) did little to impress the
\nmarket.<\/p>\n
The signing could pave the way for the disbursement of $360
\nmillion in IMF loans, but not before mid-January at the earliest.<\/p>\n
Earlier this year, a mere remark by the IMF on Indonesia was
\noften sufficient to swing the rupiah sharply in either direction.<\/p>\n
However, that effect has lessened, as last July a new
\ngovernment took over and secured the IMF's support.<\/p>\n
\"We don't expect any nasty surprises in the short term, so
\nthat should help the rupiah,\" Pardi added.<\/p>\n
He said that, at best, the rupiah could test the 9,800 level,
\nbut even then only for a short period before dollar hunters set
\nin to erase the gains.<\/p>\n
Mirroring the rupiah's tight trading pattern, the Jakarta
\nStock Exchange (JSX) Composite Index has been moving between 370
\npoints and 380 points over the past few weeks.<\/p>\n
The JSX index closed last week trading a notch lower at
\n374.69, as against 377.21 a week before.<\/p>\n
Trading last week was cut short by a bourse holiday on Friday,
\nand again this week on Monday and Tuesday in observance of the
\npost-Ramadhan Idul Fitri holiday.<\/p>",
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"sponsor": "Okusi Associates",
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