Rupiah set to strengthen after IMF's latest loan<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The rupiah is expected to remain firm against the U.S. dollar
\nin the coming week amid continued bullish sentiment in the
\nmarket, with analysts predicting the local unit to test the level
\nnear Rp 8,500.<\/p>\n
Last week, the local unit closed stronger at Rp 8,630 against
\nthe American greenback, than Rp 8,740 the week before.<\/p>\n
Analysts Ferry Latuhihin and Wiwan Wiradjaja agreed that the
\noverall sentiment in the market was positive and the rupiah still
\nhad a good chance of strengthening next week.<\/p>\n
"The rupiah has tended to strengthen due to the disbursement
\nof the IMF's latest loan tranche, coupled with the recent upward
\ntrend of regional currencies against the dollar," Wiwan told The
\nJakarta Post over the weekend.<\/p>\n
The slower-than-expected U.S. economic recovery has been
\nmostly to blame for the dollar's recent poor sentiment against
\nregional currencies.<\/p>\n
The International Monetary Fund agreed last week to disburse
\nUS$358 million of its latest loan tranche to the country, as part
\nof a $5 billion loan program.<\/p>\n
The fund said the approval reflected the country's encouraging
\neconomic performance.<\/p>\n
The IMF is administering a three-year $5 billion loan program
\naimed at spurring economic reform in Indonesia. The disbursement,
\nonce completed, would raise Indonesia's total borrowing under the
\nprogram to about $2.6 billion.<\/p>\n
However, Ferry said the IMF's approval for the loans had
\nalready been calculated by the market, and that there was nothing
\nsurprising about the disbursement. "It's only enhancing the
\ncredibility of the country," he said.<\/p>\n
Even without that, the rupiah would still be on the rise as
\nthe market is gearing up to absorb a significant dollar supply
\nfrom offshore.<\/p>\n
"The dollar supply will come from foreign investors interested
\nin the IBRA's massive sales of assets. This should have a good
\nimpact on the rupiah, as they have to convert their dollars into
\nrupiah," Ferry added.<\/p>\n
The Indonesian Bank Restructuring Agency is currently
\nlaunching the sales of some Rp 150 trillion worth of assets.<\/p>\n
The sales of assets, which are made up of commercial and
\ncorporate debts, will be using a combined mechanism of direct
\nselling and tenders.<\/p>\n
Also, both analysts were of the opinion that the central bank
\nwould keep an eye on the rupiah's performance, with a strong
\npossibility of intervening to make sure the rupiah moves within a
\nlow range of volatility.<\/p>\n
All this would maintain the recent upward trend of the local
\nunit.<\/p>\n
On the stock market, after posting a 3.5 percent drop last
\nweek on huge profit-taking, the Composite Index is set to rebound
\nin the coming week.<\/p>\n
The index dropped 19.141 points over the week to close at
\n525.86 points from the previous week's closing at 545 points.<\/p>\n
"That correction was normal, and with the overall market
\nsentiment still positive at both the corporate and macroeconomic
\nlevels, I think the index is bound to rebound this week," Ferry
\nsaid.<\/p>\n
There will also be some "window-dressing activities" from
\ncorporations, especially blue chip companies, to boost their mid-
\nyear portfolios ahead of the end of June, Ferry added.<\/p>\n
The daily volume last week averaged 607.7 million shares
\nvalued at Rp 396 billion ($45.9 million) compared to the previous
\nweek's 987 million shares valued at Rp 703 billion.<\/p>\n
State-owned telecommunication firm Telkom lost Rp 200 over the
\nweek to Rp 4,075 and state international call operator Indosat
\nclosed Rp 200 lower at Rp 11,250.<\/p>\n
Cigarette maker Sampoerna dropped Rp 300 over the week to Rp
\n4,175 while rival Gudang Garam fell Rp 1,500 to close at Rp
\n10,050.<\/p>\n
As for the impact of the Manulife case on the stock market,
\nFerry said that so far, the impact was insignificant.<\/p>\n
Manulife Indonesia has appealed to the Supreme Court against
\nthe shocking June 13 commercial court ruling, which declared it
\nbankrupt.<\/p>\n
The unit of Canada's Manulife Financial Corp. was sued by the
\nnow-defunct former partner, PT Dharmala Sakti Sejahtera, over the
\nnon-payment of a 1999 dividend.<\/p>",
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